Home Prices – May 2009 – Beginning to Bottom Out?

posted by Nima

July 28, 2009 · Posted in General Economics 

home-price-index-may-2009
Click image to enlarge.

On an annualized basis, overall home prices are down 16.83%. But compared to April they actually went up in May, by 0.44%. This is the first time since June 2006 that composite home prices have not posted a monthly drop.

Cities which still posted monthly declines were Phoenix, Los Angeles, Miami, Las Vegas, and Seattle. In all other major cities prices actually jumped up:

Top 3 monthly jumps:

1. Cleveland, OH: 4.12%
2. Dallas, TX: 1.88%
3. Boston, MA: 1.58%

Where prices still declined, the top 3 declines were as follows:

1. Las Vegas, NV: -2.58%
2. Phoenix, AZ: -0.85%
3. Miami, FL: -0.81%

Top 3 annual declines:

1. Phoenix, AZ: -34.17%
2. Las Vegas, NV: -32.01%
3. San Francisco: -26.15%

After 3 years, this is the first sign that home prices may be beginning to bottom out. It shall be pointed out that residential homes were the first asset class to fall, way ahead of everything else hit by the financial crisis. Thus it is just as likely that they will be among the first assets to bottom out while others continue to decline.

What remains to be seen is how the wave of foreclosures that has been paused via moratoria, will play out once it comes full circle.

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Comments

2 Responses to “Home Prices – May 2009 – Beginning to Bottom Out?”

  1. LauraB on August 2nd, 2009 11:48 pm

    I wonder if this uptick in home prices is just seasonal and how much impact the $8,000 dollar credit is having. When that credit is taken into account, are prices really up? Prices may appear to have gone up month-over-month (in part because of the credit?), but what about year-over-year? In other words, how do sales in May ‘09 compare to May ‘08? Are they up or down? Spring/Summer traditionally has higher home sales because people are moving while their kids are out of school, etc. Also, the prime and Alt-A problems are just beginning. I highly doubt we are anywhere near the bottom in housing.

  2. Nima on August 3rd, 2009 10:24 am

    … and actually, when you look at the seasonally adjusted data, prices are still down. The decline in housing is obviously slowing down a bit, but I agree that it is more likely that the bottom is not in. I mean, we have had 3 consecutive years, with composite home prices falling every single month! Of course there will be a temporary pause in price declines from time to time …

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