Case Shiller show Home Values up – down – up – down
Real Estate is local. Whatever is happening in the Steamboat Springs real estate market has nothing to do with what is happening in Boulder, or Houston, or Chicago. But there are similarities with the Steamboat Springs real estate and other small resort towns like Bend, Oregon.
Absorption rate in Steamboat real estate has gone form 18 months of inventory a year and a half ago to roughly 7 months of inventory. Bend Oregon has seen similar real estate trends and they are seeing such a reduction in inventory that multiple offers and prices are on the rise.
Recent Case Shiller numbers we not as friendly to real estate values. Sorry, English teachers, I know Case –Shiller has nothing to do with real estate value. But it wasn’t not all negative.
Prices were up compared to a year ago in just five cities: Denver, Detroit, Miami, Minneapolis and Phoenix.
The continued down markets are attributed to the continued declines in most of the country in large part to rising foreclosures, which they said are reducing prices and keeping new-home sales weak.
“Foreclosed homes are usually sold at steep discounts, thereby lowering average prices. And by expanding the supply of low-priced previously occupied homes, foreclosures tend to limit demand for new homes.
Some economists expect foreclosures to keep prices under pressure this year, even though they think sales of previously occupied homes will rise.
Banks are stepping up foreclosures in about half the states. The increase comes after state officials settled a dispute in February with five of the biggest mortgage lenders over foreclosure abuses.
“Foreclosures, excess supply and weak demand will drive home prices … down at least another 5 percent,” said Patrick Newport, an economist at IHS Global Insight.
Stan Humphries, chief economist at the real estate website Zillow, said it’s normal in the early stages of a housing recovery for prices to keep sliding even as sales start to tick up.
“This is all part and parcel of the bottoming process,” he said.
Yelena Shulyatyeva, an economist at BNP Paribas, said she expects 1 million homes to be foreclosed this year, up from 800,000 in 2011.
Mark Vitner, an economist at Wells Fargo, said there’s also a divide between so-called “distressed” home prices and the rest of the market. Distressed homes include foreclosures and “short sales.” Short sales occur when lenders allow homes to be sold for less than what’s owed on the mortgage.
Home-price indexes that exclude distressed properties suggest that prices are inching up.
For non-distressed properties, “there’s really some intense competition out there,” Vitner said. “A lot of houses are getting multiple bids.”
Humphries estimates that foreclosed homes made up about 20 percent of February sales. That figure has been 15 percent to 20 percent since late 2008, he said. In a healthy market, it’s usually less than 5 percent.” (Seattle Times)