Last week’s news of a double dip in housing prices spread like wild fire around the Internet, leaving many in the real estate industry discouraged, disgruntled and even a little dismissive.
After all, according to the Case-Shiller Index: “The average price of a single-family home reached a new low in the first quarter and is now at 2002 levels, according to the Standard & Poor’s/Case-Shiller index. The downturn is the most acute since prices began falling several years ago. The index fell 4.2% in the first three months of 2011 after declining 3.6% in the fourth quarter. Analysts said the first-quarter index decreased 5.1% from a year earlier.”But, says Jim Gillespie, CEO of Coldwell Banker, it’s important to note that this information is based on only 20 national markets. In addition, Barclays Capital assured that “these signs [unemployment, housing prices, jobless claims] do not indicate a double-dip back into recession.
According to Housingwire.com, Barclays believes this temporary downturn is driven by concerns over inflation, which have hindered consumer spending. However, unless energy prices keep rising, real consumer spending should now improve, Barclays said.
According to the Housingwire.com article, “While the research firm is not calling a bottom to the market, it does expect things to get better, even in the housing market. Home prices continued to fall in the first quarter, hitting a new low and reaching levels seen in 2002, according to the latest Standard & Poor’s/Case-Shiller index. “We do not believe this decline has macro implications,” Barclays said of falling home prices.”
Corelogic also revealed a flicker of good news. According to DSNews.com, CoreLogic’s reading includes distressed transactions involving REOs and short sales, which have been blamed for dragging down overall price trends for residential properties. The impact of distress has become more pronounced in recent months as these homes have claimed a larger share of sales activity, particularly in foreclosure hotspots.
To illustrate the divergence in distressed and traditional pricing, CoreLogic provides a separate measurement that excludes distressed transactions.
When you take REOs and short sales out of the equation, the company found that prices declined by just 0.5 percent in April compared to a year earlier, versus the 7.5 percent drop in the distress-included index.