U.S. home prices continued to march lower in March and have entered “double dip” territory, according to the Standard Poor’s/Case-Shiller Home Price Indices.
“Home prices continue on their downward spiral, with no relief in sight,” said David Blitzer, chairman of the SP Index Committee, in a report Tuesday.
Home prices reached lower lows than previously set in 2009 in 12 of the 20 cities tracked by the overall index, confirming what Blitzer and others call a “double dip.”
The Denver home-price index still hasn’t set a new low, but at 120.55 in March, it is not far from the recession low of 120.21 set in February 2009.
The indexes — set at 100 in January 2000 — show Denver home prices have returned to 2001 levels. So, at 120.55, that means metro home prices have risen about 21 percent since 2000.
Year over year, home prices are down 3.6 percent in the 20-city index, including a 3.8 percent drop in metro Denver. Washington is the only metro area not to show an annual decline.
Local real-estate experts attribute the rise and dip in prices to federal tax credits for homebuyers that moved sales forward.
“National reports are stating a double dip in the market, but it is really a reflection of the artificial bump the 2010 tax credit created in the market,” said Alison Brennan, a broker associate with Re/Max Professionals’ ABC Investments Team in Littleton.
The credits arrested a double-digit slide in home prices even if they didn’t create a permanent bottom, said Ron Thorne with Keller Williams Advantage Realty in Lakewood.
“It was something to get some hope and some excitement and some activity and pull us out of an abyss of despair,” he said.
Thorne said he has shifted his message to buyers from one of housing as an investment to that of shelter.
“The numbers are telling us it is not that scary in Denver,” he said.
Buyers can lock in a fixed payment at low interest rates — unlike renters, who probably face rising payments in coming years because of low vacancy rates. Landlords are more willing to let tenants out of leases now than during the boom days because they can quickly find a replacement and charge them a higher rent, Thorne said.
Boulder mortgage banker Lou Barnes said Colorado has continued to see in-migration, worked through its foreclosure problems before other states and cut back sooner on new construction, all positives.
But mortgage credit remains tight, and any kind of price declines leave more borrowers owing more on their mortgages than their homes are worth.
Price declines also create “a perfect standoff of sellers who don’t want to give their houses away and buyers who don’t want to buy them,” Barnes said.
The total value of U.S. homes, $22.5 trillion in 2007, stood at $16.5 trillion at the end of last year, said Barnes, quoting Federal Reserve tallies.
The mortgages behind those properties fell only from $11.5 trillion to $10.5 trillion. Given that about 70 percent of households carry a mortgage, borrowers as a group have little equity.
U.S. households that did everything they thought they were supposed to do have earned nothing in the stock market and watched their home equity disappear over the past decade, Barnes said.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
Article source: http://www.denverpost.com/business/ci_18179151
