Average US city property prices now flat, according to new report

The rate of decline in average property prices in the US has slowed with the market now flat after gains in the spring and summer, according to the latest figures to be published.

The 10 city and 20 city Case-Shiller Home Price Indices from Standard & Poor’s declined 6.4% and 7.3%, respectively, in October, bringing average property prices to levels last seen in the autumn of 2003. It also marks nine months of improved data, beginning in the early of 2009.

In the report, David Blitzer, chairman of the Index Committee at Standard & Poor’s, said existing home sales have been strong in recent months, burning through the remaining inventory, a sign of elevated consumer confidence.

‘The turnaround in home prices seen in the Spring and Summer has faded with only seven of the 20 cities seeing month-to-month gains, although all 20 continue to show improvements on a year-over-year basis. All in all, this report should be described as flat,’ Blitzer said.

‘At the same time, housing starts remain weak, fears that the market will be swamped by a wave of foreclosures are heard and government programs aimed at the housing market will expire in the first half of 2010,’ he added.

From the peak in home prices in the second quarter of 2009, the 10 city composite has dropped 33.5%, and the 20 city composite is down 32.6%.

Las Vegas, one of the hardest hit cities in the country, continues to show signs of improvement, according to the report. Prices dropped for 38 consecutive months in the city, dropping 55.4% from its peak in August 2006. On the brighter side, San Francisco reported seven consecutive months of improvement, San Diego reported six, with both Los Angeles and even Phoenix reported five months of gains.

Blitzer said that he is not concerned about a double-dip in prices. ‘The most recent double dip in home prices was at the start of the 1980s when the economy went through two back to back recessions while Federal Reserve policy made a number of sharp turns up and down,’ he said.

‘Given that the current Fed policy has been in place for some time and that everyone seems to agree that the next move is a small shift to tighter money which will most likely begin sometime in 2010, I doubt there will be enough volatility in the economic environment to cause a double dip in home prices,’ he added.

Although the current economic waters remain murky, the usual signs of the double dip are missing. Blitzer said double dips occur in environments ravaged by erratic and surging foreclosures, sharp drops in consumer confidence, shifting Fed policies and a plunge in the stock market.


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