Well, it could get worse (couldn’t it?)–home prices

If you’re really worried about home prices, maybe they’re keeping you up at night, don’t read this post.

Hidden in all the news about Libya and the Christchurch earthquake, the Case-Schiller home price index came out this last Tuesday.  The data, which is issued by Standard & Poors, is for December.  In the latest survey, Case-Schiller found that while some markets – notably California coastal – are improving slightly, ours isn’t one of them.  Phoenix lost 1.7% in the Nov-Dec 2010 period, 8.3% for the year.  The National home price index lost 4.1%.

As if that weren’t bad enough, in the Barron's of February 21st, 2011 we read that CoreLogic has found that the National Association of Realtors (NAR) has consistently overstated home sales data leading to an overstatement in 2010 of between 15-20%.  Well, imagine that!  You can read a short article from UPI about this issue here.  The error was caused by a benchmarking problem caused by more sellers using Realtors rather than trying to sell homes themselves, and a consolidation of Multiple Listing Services, which is where Realtors list home for sale.

The good news from CoreLogic is that if a sale was not foreclosure or short sale, prices increased last year (that is, if the property could be sold), whereas distressed real estate obtained a little less.

Here is a video of the NAR chief economist explaining and excusing himself:



If you want to read a full explanation you may do so HERE.

Now, rather like politics, all real estate data is, or should be local.  You probably receive some of the most complete local real estate data in you mailbox every over month or so from local Realtor Helene Cass.  Her newsletter is also available online HERE.The key point is that forerclosures don't dominate in our ZIP code although whether that's also true of short sales I don't know.  In Cimarron Hills, 2010 sales were down by 0.37%; Cimarron Ridge, 8.52% and Sunset Point a tear-jerking 22.39%  Full $/sq.ft details are in Helene's newsletter.

Of course, how one views things is largely a function of what we focus on.  While the Barron's article we referenced earlier points out that demand for mortgages is at a 27-year low, on the other hand Case-Schiller points out that the ratio of home prices to average incomes is about back to normal:

So, I suppose, while we might consider from this that the so-called real estate "bubble" is over, it still remains to be seen how long it will take for home inventories to reach a normal level, whatever that means.

In all of this, if one's home has zero or minimal leverage, and one isn't planning to move, a lot of this data may be moot other than to make us feel more or less wealthy.  But if one is highly leveraged, or even under water, while there is light at the end of the tunnel, whether it may yet be a train is unknown.