Home Prices Declined to New Lows in 2011

http://www.nytimes.com/interactive/2011/05/31/business/economy/case-shiller-index.html?ref=business#city/DAL

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"Actions always have consequences; realistic thinking helps you to determine what those consequences could be." (John C. Maxwell)

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With all that positive talk when home prices began to recover in 2009, nothing's happened since.

The S&P Case-Shiller index of home prices (20 cities) fell to new lows in 2011 according to data published yesterday.

Case-Shiller is, and has been, the most prestigious home market tracker in the U.S. Their interactive chart in the article I've attached speaks volumes about where the peaks and valleys have been.

Only Dallas has held up relatively well. Dallas was a special case during the housing boom; prices in Dallas rose more slowly than in any other market except Detroit. As the article points out, one reason for its slow ascent and subsequent slower fall may be that, because of state laws, refinancing mortgages is harder in Texas. That meant there was less money to bid up prices in good times, and fewer homes worth less than what was owed when the bad times arrived.

Steve Brown (Dallas Morning News) points out today that about a third of the homes being sold in the U.S. are previously foreclosed or otherwise distressed. The average discount for these houses is 20%: "Pull the distressed stuff out of the mix, and home prices are starting to inch up."

The differences in prices by neighborhood are also dramatic: the median home sale prices in the Park Cities rose 25% in January from a year ago along with a 12% rise in North Dallas and 10% in Frisco. But for all of that, median sale prices fell 42% in The Colony, 14% in DeSoto and 12% in Garland.

So, for Dallas and its suburbs, we have the best case of a mixed case of a housing market that continues to be effected by foreclosures and houses worth less than there mortgage value.

From CoreLogic:
States with the Highest and Lowest Percentage of Homes Worth Less Than their Mortgage Value

HIGHEST
Nevada: 61%
Arizona: 48%
Florida: 44%
Michigan: 35%

LOWEST
New York: 6.4%
Alaska: 6.9%
Pennsylvania: 8.4%
Montana: 9.0%

U.S. 22.8%
Texas 10.2%
Dallas 12.3%

So, another case in point for those who don't see the overall economy coming back until somewhere between 2014 and 2019. But, what about those outstanding reports coming out this week on auto sales? Some projections for auto sales are at 15 million units (a huge jump!) sold for 2012 based on current sales rates. But, how much of that is pent up demand? The average age of a vehicle on the road today is 10.8 years which is the highest on record.

We'll see.