Have Real Estate Prices Stalled?

Have Real Estate Prices Stalled?Not only have rising stock prices come to a halt on Wall Street, the same may also be true with real estate prices. While decidedly less visible than the abrupt stock-market losses seen worldwide during the past week or so, there is growing evidence that home values have slowed and in some cases declined.

Just two weeks ago, on August 11th,  the National Association of Realtors reported that “the median existing single-family home price increased in 93 percent of measured markets, with 163 out of 176 metropolitan statistical areas (MSAs) showing gains based on closings in the second quarter compared with the second quarter of 2014.”

The hugely-positive quarter metro figures got a lot of attention, as they should, but lurking in the background was a report from the influential Real Estate Economy Watch saying something very different.

“Despite market reports of strong median home price appreciation this spring, gains are very uneven and nearly half of homes in ten of the nation’s largest markets actually lost value in May. On a house-by-house basis, about one-third fewer homes in the largest markets gained value during the heart of the spring buying season this year compared to last, according to Weiss Residential Research’s Indexes.

“Only 54 percent of homes in the markets appreciated during May compared to 81 percent in May 2014, a sign that the downward trend may continue in the coming months.  In Denver, the hottest market in the nation, 84 percent of houses appreciated in May compared to 95 percent last year.  In the Washington, DC market, weakest of the top ten, only 34 percent of houses gained value in May compared to 57 percent in May 2014.”

For as long as there has been air I have been telling people that broad national pricing​ surveys even down to ZIP code level may not apply to them because real estate is a localized commodity.

Real Estate Prices

Next we have a report from Zillow explaining that “the housing market is slowing down, with home values seeing the first negative monthly change since the market began its recovery nearly four years ago.”

“Of the 517 metros covered by Zillow,” said the company, “204 saw a slowdown, including major metros like Washington, DC and Cincinnati, where home values declined month-over-month in July. The slowing appreciation is a sign that the market is returning to normal; economists have expected to see growth flattening out as the recovery continues.

“Even hot markets like Denver, Dallas, San Jose and San Francisco, which had double-digit annual home value growth in July, saw their monthly appreciation rates ease from June.”

The difference between stock and real estate is that while both can be seen as “investments,” with housing you at least get a roof over your head. It will take more reports to see if the real estate recovery is generally slowing or even in decline, but whatever happens owners will be wise to keep making their mortgage payments, buyers should look for bargains, and when sellers get an offer before saying “no” they may want to consider that if the local market is really stalled that an offer in hand may be better than the next offer, if there is a next offer.

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