PrintPrices fell 1 percent in December?the sixth consecutive month of price decreases? to a level not seen since December 2002.
Lender Processing Services’ preliminary estimates put January has prices down an additional 1.2 percent. From the market peak in June 2006, LPS calculates that the average national home price is down 31 percent. Prices have fallen from a national average of $282,000 in June 2007, to $226,000 in December 2008, and now LPS calculates the national average is at $196,000.
During the period of most rapid price declines, from June 2007 through December 2008, the LPS national average home price fell at an average annual rate of 13.8 percent. Since December 2008, prices have fallen more slowly at an average annual rate of 4.4 percent. The LPS national average home price in December continued the seasonal pattern that has modulated prices since 2009. LPS has found that while seasonal variations occur in the market for un-distressed home sales - due to school schedules, for example - short sales do not vary over the year nearly as much.
The apparently significant seasonal effects LPS and others have reported are a consequence of the large proportion of short sales among home sales after the bubble. These sales have been treated as if they experienced typical seasonal variations and thus they exaggerated seasonal price variations. Beginning next month with the updated LPS HPI, non-distressed prices will show milder seasonal variations, more consistent with previous years.
Price changes were largely consistent across the country during December, increasing in only 8.0 percent of the ZIP codes in the LPS index. Price changes were also consistent across price tiers with a uniform decline of 1.0 percent.
Changes during December were largely consistent among metropolitan statistical areas (MSAs). Of the 411 MSAs the LPS HPI covers, average prices declined for all of the MSAs (374) in 44 states. In addition, while average prices did not decline for all MSAs in the remaining states, prices fell in a total of 402 MSAs out of the LPS 411.
Among the MSAs for which both LPS and the Bureau of Labor Statistics provide data, only Phoenix and Miami saw average prices increase during December. Many of these MSAs saw decreases during December. Half of the MSAs saw declines of more than 1.0 percent over the month. San Francisco, San Diego, Detroit, Chicago and Atlanta all declined by more than 1.5 percent.
“Despite the broad picture of home price declines following the bubble, prices have not been consistently declining for all MSAs in the country. About one-fifth (89) of all the MSAs that LPS covers has seen average home prices increase since December 2008. For 90 percent of these MSAs, prices rose only if the lowest-priced homes in their markets rose. This correlation did not necessarily hold for higher-priced homes in those areas. Unfortunately, the MSAs that have seen price increases since December 2008 are generally relatively small; Boston and Pittsburgh are exceptions,” said Raj Dosaj, vice president of LPS Applied Analytics.
Examples of MSAs that have seen increases in average home prices since December 2008 on the larger end of the spectrum are: Springfield, Mass., Albany, N.Y., Brownsville, Texas and Hot Springs, Ark. States with the highest percentage of MSAs whose prices increased are mostly in the West North Central Census Division - Minnesota, Missouri and Nebraska - and in the Middle Atlantic Division - New York and Pennsylvania.
Leave a Reply