Home prices dropped throughout the nation in December 2010 – sometimes dramatically – according to the Case-Shiller home pricing index, which reports home pricing numbers for 20 cities nationwide, including California cities San Diego, Los Angeles and San Francisco. December’s price drop eliminates most of the tentative gains in pricing that were made in California over the course of 2010, although prices in all three California cities remain significantly higher than they were at the bottom of the recession in early 2009.
In the one month period from November to December 2010, prices dropped 1% in San Francisco, 1.4% in Los Angeles, and 0.7% in San Diego. In comparison, eleven other US cities posted their lowest home pricing since the recession’s start. Only Washington, D.C. registered a rise in housing prices. [For detailed home pricing numbers, see our Market Chart, California Tiered Home Pricing.]
The drop in home sales, which comes after a brief rise for many cities in early 2010, can likely be attributed to the expiration of the homebuyer tax credit earlier in 2010, reports the New York Times. The tax credit attracted numerous buyers to the market, but did nothing to ensure a sustainable recovery. Instead, buyers were merely front-loaded, cannibalizing current sales volume and thus causing prices to drop.
Some other price-reporting organizations, most notably the National Association of Realtors (NAR), have reported significantly higher home pricing figures. However, the Case-Shiller index (as well as numbers calculated independently from recorded data by First
American’s CoreLogic) cast doubt upon NAR’s rosy data, indicating the lull in nationwide home pricing is likely far from over.
first tuesday Take: The price drops in recorded sales reported by the Case–Shiller index are well in line with first tuesday’s own predictions for the real estate recovery. This recovery will be lengthy and slow (lasting well into 2013 before sales volume picks up, with prices following within one year), and prone to minor quarterly minor and falls as the economy struggles to regain its footing.
Trade unions do a disservice to the real estate industry when they attempt to defy the facts with unreasonably optimistic numbers. Such figures have consistently been wide of the market since the real estate price crash began in 2006, and will continue to be wrong for as long as they underemphasize the real magnitude of the housing market’s fall – both in California and nationwide.
Re: “Home Prices Slid in December in Most U.S. Cities, Index Shows” from the New York Times