Closer to the Bottom

Loren Kaye
President of the California Foundation for Commerce and Education

If all economic news is bad news, this item won’t disappoint.

April’s S&P Case-Shiller home price index was released yesterday, showing that home prices in 20 major U.S. cities have dropped a record 15.3% in the past year and are now back to where they were in 2004. But in what may be a small sign that things are at the brink of a turnaround elsewhere in the country, three of the major metropolitan areas studied — while still posting negative annual figures — did show some improvement over the declines reported last month. And eight of the 20 metro areas covered showed home-price growth in April from March.

No silver lining for major California metro areas; the drop was much worse than the national average, and worse than last month’s year-over-year report:

23.1% drop in Los Angeles home prices

22.4% drop in San Diego

22.1% drop in San Francisco

Only areas reporting worse declines were Phoenix (25%), Miami (26.7%), and Las Vegas (26.8%).

Please note that the index still shows that, since 2000, home values in Los Angeles, San Diego and San Francisco have still increased overall by 103%, 81%, and 65%, even after the collapse during the past year.

The US Dept of Commerce released residential construction data last week. Nationally, housing starts decreased May from April by 1.0%, and were down from a year ago by 41%. The picture in the western states is even worse. Single family home sales decreased by 18% since last month, and are down by nearly 50% year-over-year. This news adds more detail to the dire housing picture painted recently by Bob Rivinius.

Can’t make much good news out of this, except maybe we’re closer to the bottom.

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