Data through October 2009 released today in the S&P/Case-Shiller1 Home Price Indices, which omit apartment sales, record improvement in the annual rate of decline of the 10-City and 20-City Composites compared with September’s reading. It was approximately the ninth month of better readings in the statistics, beginning in early 2009.
The 10-City and 20-City Composite Home Price Indices declined 6.4% and 7.3%, respectively, in October compared with one year earlier. All 20 metro areas and both Composites showed an improvement in the annual rates of decline in comparison with September. Commented David M. Blitzer, chairman of the Index Committee at Standard & Poor’s:
“The turnaround in home prices seen in the spring and summer has faded with only seven of the 20 cities seeing month-to-month gains, although all 20 continue to show improvements on a year-over-year basis. All in all, this report should be described as flat.”
Karl E. Case, the Wellesley College economist who helped design the housing index, was quoted in the New York Times as expressing a pessimistic outlook:
“I’m worried. Everyone’s worried. If prices sink 15 percent from here, which is a possibility, and the 2008 and 2009 loans go bad, then we’re back where we were before — in a nightmare.”
A summary of the monthly changes using the seasonally adjusted (SA) and non-seasonally adjusted (NSA) data can be found in the table below.
Despite the pessimism above, some analysts see little cause for alarm, according to the Times. Dan Greenhaus of Miller Tabak, for one, said that if prices fell “a bit further” it would sop up some of the excess inventory still weighing on the market.
Because of Case-Shiller’s limitations–its reliance on single-family homes and on whole metro regions, which for New York City include all the boroughs and the New Jersey and Westchester County suburbs–the likelihood of making sense of the numbers for Manhattan is small.
I’ve been saying for months that the Big Apple’s prices could–could–drop by as much as 5-10 percent in 2010. But I’ve also been saying that, when interest rates inevitably rise, the monthly cost of housing for anyone who buys now will be essentially the same as for anyone who buys then.
Let’s all remember that only two things in life are certain. The price of housing is not among them.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022