Housing Market Once Again Regional

Mixed recovery signals a return to localized shifts and trends

The S&P/Case Shiller home-price index, released last Tuesday, showed a 3.6 percent increase in home prices from the first quarter of this year to the second. According to the index, however, the average home price year over year dropped 5.9 percent for the first six months of this year compared with last year.

Average home prices are performing differently across the country — The S&P/Case-Shiller index tracks 20 “MSAs” (metropolitan statistical areas), of which, according to David M. Blitzer, Chairman of the Index Committee at S&P Indices, “eight bottomed in 2009 and have remained above their lows.  These include all the California cities plus Dallas, Denver and Washington DC, all relatively strong markets. At the other extreme, those which set new lows in 2011 include the four Sunbelt cities – Las Vegas, Miami, Phoenix and Tampa – as well as the weakest of all, Detroit.”

Mortgage rates continue to stay at record lows for the entire country — Last Thursday, Freddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®), which showed that the average rate for a 30-year fixed mortgage hit an all-time low (at least as far back as 1971) in August of 4.15 percent.

Demand for purchase loans remains down — The Mortgage Bankers Association revealed in a separate survey that, despite record low mortgage rates, demand for purchase loans remains lower than it has been since the 1990s.

Blitzer also noted that “these shifts suggest that we are back to regional housing markets, rather than a national housing market where everything rose and fell together.” In this buyer’s market, that means paying more attention to local sale price trends as cities and areas rebound differently around the country.