Outside D.C., a grim housing market
Wednesday, January 26, 2011
While home prices continue to tumble in many major metropolitan areas, the Washington region is one of the few bright spots where prices are rising, according to two reports released Tuesday.
Only four of the 20 areas tracked by the S&P/Case-Shiller Home Price Index posted year-over-year price gains in November. Washington led the way, with a 3.5 increase in single-family home prices, according to the report.
A separate analysis by the research firm Delta Associates found that average home prices in the D.C. area in the fourth quarter were up 7.5 percent from a year earlier, to $404,501. The jump was the area's fifth consecutive quarterly gain, the report said.
The Washington region outshines many other metro areas in part because its robust job market has bolstered demand and prices for housing. But the area faces a risk over the coming months that the federal government could rein in spending and slash its workforce, undercutting the local economy and upending the gains in home prices.
Nationally, housing prices remain under pressure from the bloated supply of foreclosures and the nation's high unemployment rate. As long as people are without jobs or fear losing their livelihoods, they are unlikely to buy homes and help drive up prices.
The closely watched S&P/Case-Shiller report shows that housing prices, compared year-over-year, have declined nationally for six consecutive months. The downward path suggests that housing prices could, by spring, hit their lowest level since April 2009, said David Blitzer, the index committee's chairman.
Already, nine major cities have dipped to new lows, the report shows. They are Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, Portland, Ore., Seattle and Tampa.
In the past, a revival of the housing market has played huge role in pulling the economy out of downturns. So a double dip in home prices would be a setback to the nation's financial health just as the economy is starting to show signs of improvement.
On a year-over-year basis, the the 20-city price index fell 1.6 percent in November. Aside from Washington, the locales that posted annual gains were San Diego (up 2.6 percent), Los Angeles (up 2.1 percent) and San Francisco (up 0.4 percent.)
On a monthly basis, the index, which is not seasonally adjusted, dropped 1 percent in November, with prices slipping in every city except San Diego, where prices edged up 0.1 percent.
Paul Dales, a senior economist at Capitol Economics, said that most of the price declines in the second half of last year followed a plunge in home sales after a lucrative tax credit of home buyers expired in the spring. As sales dropped, the excess supply of homes on the market grew.
"With home sales now rising, the downward pressure on prices is likely to ease," Dales wrote in a note to clients. "Nonetheless, the fundamental imbalance between still low housing demand and still high supply will be enough to push prices lower throughout this year."
The Case-Shiller index measures repeat sales of single-family homes and reflects a rolling three-month average. So the November data capture purchase transactions that closed in September and October as well.
By contrast, the Delta report captures the sales of homes listed on the local multiple-listing service. That report shows that some of the strongest gains in the Washington metropolitan area in the fourth quarter came in the District and some of the close-in suburbs.
The average price in the District jumped 15.7 percent in the quarter from a year earlier. In Alexandria and Arlington County, the other "core" jurisdictions, prices rose 4.4 percent and 6 percent, respectively. The average home price in these localities increased to $541,800.
In the area's inner ring - Virginia's Fairfax County and Maryland's Montgomery and Prince George's counties - prices rose 5.6 percent, to an average of $394,900. Prince George's 7.8 percent decline in prices was offset by gains of more than 8 percent in Montgomery and Fairfax.
There were healthy price gains place in the outer suburbs, where the average price reached $318,200. Prices rose 9.2 percent in Prince William County, 4.5 percent in Maryland's Frederick County and 3.4 percent in Loudoun County.