Finding the Silver Lining in January’s Case-Shiller Report

The clouds are still hovering, but you can find a silver lining in the Case-Shiller January Home Price Indices Report because while home prices are still falling in most metropolitan areas, they are falling at a slower pace. Bloomberg News donned their rose colored glasses as well in one of their Case-Shiller articles pointing out that while we indeed have a long way to go, property values are beginning to steady, and the outlook is a little less negative. As reported in the Huffington Post today, February’s consumer confidence numbers were the highest in over a year, and the just released March consumer confidence data is on par with February’s showing consumers’ resilience and upbeat outlook despite economic mixed signals.

Case-Shiller January Home Price Indices
Case-Shiller January Home Price Indices

Like the Steamboat Springs’ February Market Report, the January Case-Shiller report had its good news and as I prefer to think of it “work-in- progress” news.

January Case-Shiller Positives

* While both the 10-City and 20-City composites were down -0.8% in January ’12 vs. December ’11 that’s better than the -1.2% and -1.1% they were down respectively when comparing December ’11 vs. November ’11.

* Washington DC, Miami and Phoenix all showed price gains in their markets versus December.

*  Denver, Detroit and Phoenix were the three metropolitan areas who posted positive annual gains.

January Case-Shiller Work-In-Progress Areas

* Atlanta, Cleveland, Detroit and Las Vegas continue to have average home prices below their January 2000 levels.

* Atlanta had the lowest annual growth rate (-14.8%) as well as the only double digit negative annual growth rate.

* Both the 10-City and 20-City composites are at all time lows and are 34.4% off their relative 2006 peaks.

It might seem like the work-in-progress areas outweigh the positives, but there are other metrics at play that point to the fact that things are getting better:

* The National Association of Realtors (NAR) just released the February Pending Home Sales report, and while noting they were slightly down (-0.5%) from January, they were 9.2% higher than February 2011.

* The National Association of Realtors also reported last week that while February’s Existing Home Sales slipped (-0.9%) from January, they were still 8.8% higher than February 2011.

* Finally, there’s something to be said for stability over time and getting back on track to levels that historically provide a market with confidence and balance. The latest Case-Shiller report shows the 20-City composite is currently indexed at  135.46. As you’ll see in the chart below, when adjusted for inflation, since 1890, our home prices have remained in a relative band width between 125 & 150, so if we’re beginning to stabilize around 135, that’s actually an encouraging indicator.

Home Prices 100 Year Trend
Home Prices 100 Year Trend
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