The good news is that home prices rose for a fourth straight month in most major U.S. cities in July, from June, no shocker because we’ve just emerged from the busiest buying season. And that includes Dallas — a whole point (.3) 3%. The bad news is that when you look at last year, home prices are still trending downward, even in Dallas. Experts are warning us, no duh, the housing market remains precarious and depressed. (And unemployment! And Dodd-Frank!) Prices are expected to decline more in the coming months. So if you are shopping for a home, get ready, get set, dive in now.
Standard & Poor’s/Case-Shiller Home Price Index, which some regardas the Bible when it comes to real estate analysis, showed home prices increased in July from June in 17 of the 20 cities CS tracks. I would not be too giddy that Detroit, Chicago and Minneapolis posted the biggest monthly percentage gains — those cities have been on life support and really, still are. Prices are still falling in Las Vegas and Phoenix, which is not what those homeowners need to hear.
But North Texas prices were down 3.2 percent in July, 2011 from a year ago, the 13th month in a row that local home prices were trending downward. Home values in the D/FW area have been declining since federal housing tax credits for first time buyers expired in early 2010. Still, 3.2 percent not as bad as 4.1 percent, which is how much national home prices have trended downward over the last year. As someone said: it’s basically 2003.
Eighteen of the 20 major U.S. markets in Case-Shiller’s latest survey saw annual home price declines in July. Who was up over last year? Washington, D.C., Boston, Charlotte, Miami (foreign buyers), Tampa — but we are talking negligible amounts.
I’m actually beginning to think though, that this might be the bottom or very close. The reason is inventory: dwindling by the minute. Yesterday, CoreLogic, a leading provider of real estate information, analytics and business services, reported that the current residential shadow inventory as of July 2011 had declined slightly to 1.6 million units, representing a supply of 5 months. This is down from 1.9 million units, a supply of 6 months, where it was a year ago. It also follows a decline from April 2011 when shadow inventory stood at 1.7 million units.
What that means: there may be less distressed inventory coming on the market to drag down home prices. That slowdown could be driven by a a slower pace of disposing of new delinquencies, too. Keep in mind that the vast majority of distressed assets are below $500,000.