Home prices dropping
According to Lender Processing Services Inc. (LPS) August home price index (HPI), residential sales ending in August 2011 dropped nearly four percent from August 2010 and 0.4 percent from January 2011. The LPS HPI tracks 13,500 zip codes and determined that home prices in August continued to decline after the housing market peaked in June 2006 – the average national home price has plummeted 28.3 percent since the peak.
“Unlike many other indices, the LPS HPI tracks home prices at the date of sale on a month-by-month basis,” said Kyle Lundstedt, managing director for LPS Applied Analytics. “Our methodology allows us to detect market changes sooner than others and to provide the financial industry with the most accurately timed price information. In August sales transactions data, we saw the national average home price decline 0.9 percent, following a decline of 0.4 percent in July. This ended a series of increases during the spring of this year; a pattern that has occurred each year since 2009. In addition, the early, partial data for September sales indicates a likely further decline of approximately 1.1 percent to come. As of the end of August, the national average home price was $205,000.”
Similarly to home price studies by the National Association of Realtors, by Zillow’s economists, as well as Case-Shiller, LPS reported that home prices have fallen more slowly since December 2009 “interrupted by brief seasonal intervals of rising prices,” and the national average home price has fallen from $225,000 in 2009 to $205,000 today.
Price performances vary by home type and area
The top 20 percent of homes, priced above $321,000 dropped 0.72 percent, outperforming the bottom 20 percent priced under $103,000 whose values dipped 1.0 percent. Additionally, where a home is located has an impact on its value with average prices of nearly all Metropolitan Statistical Areas (MSAs) studied by LPS having droppedd.
LPS said in a statement, “Average prices of all MSAs in a state declined together for 347 of the 404 MSAs covered by the LPS HPI. A slightly smaller number of MSAs, 340, were in states where all price levels for all MSAs declined together. Average prices declined for all MSAs in Louisiana and Minnesota, but not all price levels declined for all their MSAs. Other states where some price levels in some MSAs increased were Illinois, Massachusetts, Michigan and New York.”
In August, average prices dropped in all of the 26 largest MSAs except for Detroit, Chicago and Minneapolis which barely changed while the remaining MSAs dropped between 0.3 percent to 2.8 percent. An interesting note LPS made was that the highest price changes during August were mostly in Michigan or nearby states, despite most recent declines being modest.
Most economic indicators are reporting price declines, but they appear to be decelerating which is a good sign for homeowners hoping to keep value in their investment, as nationally, home prices have dipped nearly a third since housing peaked in 2006. For now, these indicators are still favorable to buyers that are deal hunting.