Yet another update of S&P’s Case-Shiller Home Price Index provided news going into the Spring/Summer selling season that will be discouraging to homeowners who want or need to sell soon, and good news for prospective home buyers:
Home prices falling in most major US cities
The report notes that the 20-City Composite Index for January 2011 declined 3.1% compared to January 2010, following six consecutive monthly declines. The bright spot among the cities used in the index was Washington, DC, enjoying 3.6% growth in home values for the year.
Austin, too, has felt this trend. Despite ups and downs over the past year, we saw the lowest average home sale price in seven months in January 2011. On the other hand, the average price in January 2011 was up 5.2% compared to one year earlier — much stronger than even the strongest of the Case-Shiller cities. (While Case-Shiller is not yet reporting February data, we know that the average price in the Austin area fell again last month, but it was still up 2.9% year-over-year. Moreover, the 12-month rolling average of sale prices reached another all-time high in February.)
If monthly price declines continue, the rolling average will obviously be pulled downward as well, but this updated chart shows the stark contrast between our circumstances and the Case-Shiller Index cities (click image to enlarge):
Even using the dashed line for Austin/Central Texas home prices (unadjusted monthly data), the average price in January 2011 was 45% above the January 2000 “base,” and very near the mid-2007 market peak. The 10-City and 20-City Composite Indices also look strong compared to January 2000, but those cities’ experience since the national market peak in mid-2006 was obviously very different from ours.
AP’s report on this newest release from S&P points out that the pain is “… worse in cities flooded by foreclosures and
short sales. That includes Detroit and Cleveland, which are struggling with weak local economies. Miami, Phoenix, Las Vegas and Atlanta are reeling from overbuilding during the housing boom.“
Austin and Central Texas avoided both of those pitfalls. (See Foreclosure Impact in Austin, 2/24/11, Austin and other cities – sales and median price growth, 3/15/11, and Austin Market Dashboard Update, 3/24/11 for details.) In contrast, the Austin metropolitan area continues to experience population and job growth, and residential property inventories remain well balanced relative to home sales. This local/regional market still enjoys underlying strengths that will help us through difficulties that may well continue this year.
Our local economy and housing market do not exist in a vacuum, and much depends on what happens in those Case-Shiller cities. 2011 certainly presents challenges in Central Texas and nationwide, but the Austin area remains in an enviable position relative to much of the country. Most forecasts still view 2011 as a transitional year for the national economy, and housing is a critical factor in that transition and ultimate recovery from the recession. Austin remains poised to lead that process.
As always, I will watch, analyze, and report on our real estate market conditions. Follow me here for updates or check my Contact Me page for other ways to keep in touch.
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