Some say it’s a good thing: declining real estate prices are an indication that demand and supply are finally catching up with one another. Fueled by foreclosures and distress sales, at least homes are selling – even if prices aren’t what sellers would like to see. Year over year price declines slowed in the 2nd quarter of 2009 – the first quarterly improvement since the current slump began. Even better, economists are pumping fists and high-fiving over the month to month price increases that showed up in many markets during July.
The Zillow Real Estate Market Report for the 2nd quarter of 2009 was just released, and it shows a 12.1% decline in prices from the comparable quarter of 2008. Predictably, the worst hit metros were those who showed the biggest price run- ups and overbuilding in 2005-2006. Florida (-23%) and California (-19%) were hit the hardest hit. Pennsylvania, on the other hand, only experienced a 3.8% decline in prices. As an example of the worst markets Fort Myers (FL) took a 29% haircut in prices, El Centro (CA) a 37% decline, and in Las Vegas prices were off 35%.
For more details check out the Zillow Real Estate Report.
The S & P Case-Shiller Index for the same period, released on August 25, showed very similar results. Its widely watched U.S. National Home Price Index recorded a 14.9% decline in the 2nd quarter of 2009 vs. the year earlier quarter. That represents an improvement over the 19% decline experienced in the 1st quarter. According to that index, prices have now reached where they were in 2003, and are off some 30% from the 2006 peaks. Las Vegas and Detroit continue to be the worst hit markets, whereas Dallas and Denver have now recorded several months of positive returns.
Buttressing these favorable (or less bad) reports was news that The Conference Board Consumer Confidence Index ® rose in August – always a good sign for the economy.