On 1 hand and the other, Case-Shiller says again

Standard & Poor’s Case-Shiller Home Price Indices – which exclude apartment sales and include whole Metropolitan Statistical Areas (MSAs) – show that U.S. prices fell in the fourth quarter.  But the annual rate of return improved as compared with the third quarter.

“As measured by prices, the housing market is definitely in better shape than it was this time last year,” said David M. Blitzer, S&P’s chairman of the Index Committee.  “However, the rate of improvement seen during the summer of 2009 has not been sustained.

The chart above depicts the annual returns of the U.S. National, the 10-City Composite and the 20-CityComposite Home Price Indices.

This list exemplifies why I’m skeptical about lists

Merced, Calif., is a quiet, residential city an easy drive from Yosemite National and Pacific Coast beaches.  It’s also a perfect case study for the aftermath of the housing crisis.

Beautiful downtown Merced, California.

Such is the leisurely beginning of a piece in Forbes purporting to list cities where homes are losing the most value.

Most price declines are ‘behind us,’ say analysts

Analyzing trend data from First American CoreLogic and the Federal Housing Finance Administration, PMI Mortgage Insurance reports in its latest Housing Market Mortgage Review “that the bulk of the home price declines are behind us.”  It continues:

“. . . Both also suggest that house prices have still not reached their long-term trend levels.”

As with other goods and services, house prices depend on demand and supply.  Over a long period of time, however, the growth rate in home prices should conform to income growth – otherwise houses would become either increasingly unaffordable or more affordable, PMI observes, adding that over long periods, home price growth and income growth tend to be similar.

The data are shown in the charts below.  The first one shows CoreLogic’s Home Price Index (HPI), while the second graphs  actual levels of the HPI through July 2009, as well as the long-term trend based on the 1983-2001 house price data.  And the third charts the same relationships for the FHFA purchase-only HPI.

This stuff ain’t easily digestible, but it’s good for you.  Like carrots and leafy vegetables.  The explanation that follows the charts is worth reading and can well make clear what you’re seeing.