According to the S&P/Case-Shiller Home Price Indices released today, a trend that began in late 2007 continued in the first quarter versus one year earlier, reaching a 21-year record percentage decline.
I’ll be providing more detailed information in my newsletter on Friday, but the topline data show that the 10-City and 20-City Composites posted annual declines of 18.6% and 18.7%, respectively, slight improvements from their returns for February.
“Declines in residential real estate continued at a steady pace into March,” said Index Committee Chairman David M. Blitzer. “All 20 metro areas are still showing negative annual rates of change in average home prices with nine of the metro areas having record annual declines. Seventeen metro areas recorded a monthly decline in March, with Minneapolis, Detroit and New York posting record monthly declines. On a positive note, nine of MSAs are reporting a relative improvement in year-over-year returns and nine of the 20 metro areas saw an improvement in their monthly returns compared to February. Furthermore, this is the second month since October 2007 where the 10- and 20-City Composites did not post a record annual decline. Based on the March data, however, we see no evidence that that a recovery in home prices has begun.”
Minneapolis had a record monthly decline of 6.1% in March, representing the largest such drop of any metro area in the history of the indices. For March, Detroit and New York also reported their largest monthly declines, returning -4.9% and -2.5%, respectively. The performances of these two metropolitan statistical areas (MSAs) represent the extremes of the national boom/bust scenario, Case-Shiller stated.
The New York index is still up 73.4% from January 2000, though down 19.7% from its June 2006 peak.
With respect to this index and all the others, I always take the information with a grain of salt. They are useful for detecting trends, but each of them is flawed when it comes to the data they use. Among the various flaws are areas covered, the transactions recorded and the data researched. For example, the federal government analyzes only sales that fall within Freddie Mac and Fannie Mae parameters.
One defect in reporting on the New York MSA is that it casts a wide net including portions of Connecticut and New Jersey and, of course, boroughs outside of Manhattan, which is a world unto itself. And it takes forever to have transactions recorded in Manhattan, so the data are way out of date.
Also, I’m seeing that prices fell farthest and fastest during the last quarter of 2008 and the first two months of this year. I haven’t seen reported or with my own eyes that prices have fallen as little in Manhattan as Case-Shiller is showing.
Do you agree?
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Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022