The Real Deal New York

Case-Schiller falls to new lows, NY appraiser says not to worry: VIDEO

March 27, 2012 12:30PM
By Guelda Voien

  • Print

Case- Shiller index changes since 1988

U.S. single-family home prices are back to early 2003 levels, according to the Standard & Poor’s/Case-Shiller home price indices for January, released today.

The index shows annual declines of 3.9 percent and 3.8 percent for the 10- and 20-city composites, respectively. Both composites saw price declines of 0.8 percent in the month of January (see video below).

Both the 10- and 20-city composites are at their lowest levels since the peak of the market, in 2006. Today’s numbers represent a 34.4 percent decline since that peak. New York City posted drops of 0.8 percent month-over-month and 2.9 percent year-over-year.

Denver, Detroit and Phoenix were the only cities to post positive annual growth rates of 0.2 percent, 1.7 percent and 1.3 percent, respectively, the data from S&P shows. Atlanta posted the lowest annual return and only double-digit negative return at 14.8 percent. As The Real Deal has previously noted, Case-Shiller data is suspect when it comes to New York City, where the majority of homes are not single-family dwellings, which is all that the index measures.

But appraiser Jonathan Miller, president at analytics firm Miller Samuel, said the numbers should not be cause for alarm. “[The index is] oriented towards [asking] ‘when are we going to bottom?’ and really, the question should be ‘when are we going to stabilize?’”

Miller also cautioned that the widely cited index “lags the market,” providing information about housing prices six months earlier. That said, he cautioned that the market and the index would “stay negative,” for approximately the next year and a half, as median prices decline due to an increase in foreclosures in the wake of the recently signed mortgage settlement. He said that agreement will be treated as a sort of “go signal for foreclosures to ramp up again,” after the reprieve the housing market saw in the wake of the robo-signing scandal.

John Tashjian, principal at Centurion Real Estate Partners, agreed, though he was more optimistic. “Only after existing inventories are depleted and foreclosure activity subsides, can we look forward to growth in pricing,” he said, but added that “mortgage rates remaining low and individual homebuyers cautiously re-entering the market, replacing investors, are both healthy signs for the housing market.”

In an appearance on Fox Business, Chandan Economics founder Sam Chandan elaborated on the reasons for the price declines, specifically pointing his finger at distressed properties and discount-seeking investors. He said prices would begin to rebound as the job market continues to improve and lending standards begin to relax.

MENU