Home prices rise in three California cities
A trio of California cities bucked a nationwide home price decline in February while most of the other metro areas posted losses or flattened out, underscoring the resurgence of the Golden State’s coastal markets, data released Tuesday showed.
The Standard & Poor’s/Case-Shiller index of 20 metropolitan areas was down 0.1% from January on a seasonally adjusted basis, marking the closely watched measure’s first decline since home prices began to recover last June.
But in a positive sign for housing, the index posted a 0.6% increase from February 2009, its first year-over-year increase in more than three years.
The mixed readings come as the expiration of a federal tax credit for buyers looms at the end of this week. Many analysts expect home prices to decline once the incentive runs out — but not nearly as steeply as when values entered a nearly three-year free-fall in the summer of 2006 that helped drag the U.S. into one of the most brutal recessions since the Great Depression.
“Generally, I don’t see an upbeat picture, I see the trend as faltering,” said David Blitzer, chairman of Standard & Poor’s Index Committee. “One of the few spots that seems surprisingly strong is California.”
California cities saw home prices in February gain 0.8% in San Diego, 0.4% in San Francisco and 0.2% in Los Angeles.
Mark Zandi, chief economist with Moody’s Economy.com, said the strong showing in California reflected the reduction in foreclosures on the market over the last year. Foreclosures made up 44.3% of the resale market in February, down from an all-time high of 58.8% in February 2009, according to San Diego research firm MDA DataQuick.
“California is perhaps the most efficient state in respect to resolving its foreclosure issue and so a lot of properties were pushed through the process,” Zandi said. “There are now fewer in the pipeline.”
Although foreclosures may increase in California in coming months, leading to a period of flat prices and perhaps even some declines, the state was “much further along in getting its house in order than most parts of the country,” he said.
Not reflected in the Case-Shiller numbers are regions in the state farther from the coast where overbuilding was more prevalent and the unemployment rate remains above average, said Richard Green, director of USC’s Lusk Center for Real Estate.
“We are doing a little better than the rest of the country, and that is not particularly surprising because California, in general, didn’t overbuild the way Arizona and Las Vegas and Florida did,” Green said. “In the places we did, prices collapsed so much it’s hard for them to fall much further.”
In the next two months, some California shoppers have a shot at as much as $18,000 worth of tax credits if they get their timing right.
The federal tax-credit program, set to expire Friday, provides up to $8,000 for first-time purchasers and as much as $6,500 for some current homeowners. To qualify for that credit a buyer must sign a contract on a home by April 30 and close the deal by June 30.
Adding to that incentive is a statewide credit, which was approved by lawmakers last month and kicks in May 1, for as much as $10,000 for first-time buyers and those purchasing newly built homes.
The Case-Shiller index covers three months of data beginning in December, when sales began a three-month slump after what was to have been the federal tax credit’s Nov. 30 expiration; Congress in November extended the credit. February’s sales data capture that plunge and the traditionally slow winter months. Home sales picked up again in March, and many expect that trend to continue at least through April.
Along with the California cities, Las Vegas eked out a 0.1% gain. Fourteen cities posted declines in February over January, with the biggest losses in Portland, down 1.9%; Dallas, falling 1.4%, and Chicago, down 1%. Two cities were flat for the month.