There’s a lot of hand-wringing about decreasing housing prices:
NEW YORK – National home prices are at levels not seen since the end of 2002, but a closer look at data released Tuesday shows the worst may be over for some cities.
The Standard & Poor’s/Case-Shiller National Home Price index reported home prices tumbled by 19.1 percent in the first quarter compared to the first quarter last year, the largest drop in its 21-year history. Home prices have fallen 32.2 percent since peaking in the second quarter of 2006.
In cities across the country home prices varied dramatically, depending on affordability, foreclosure activity and the local economy. The bottom may be in sight in some markets, but nationally home values are expected to decline — though at a slower pace — for the rest of the year.
IMO it’s more than that. The precipitous drop in some markets, e.g. Detroit, Phoenix, Las Vegas, is dragging down the entire national index and making things look much worse than they actually are.
According to the Case-Shiller index for Chicago, housing prices in Chicago in March had fallen about 18% relative to March 2008 and about 27% relative to their peak in September 2006. As I’ve pointed out before when you look at those numbers on a neighborhood by neighborhood basis, you see the same pattern as you do nationally: some areas have seen sharp drops, others are holding steady. While I’d’ve preferred that my house have increased in value, I can’t interpret the degree to which its value has dropped as a sign of the apocalypse, either.
I continue to think that the policy approach that’s being taken is insane. It’s as though in response to, say, Hurrican Katrina aid had been rushed to all 50 states rather than to Louisiana, Mississippi, and adjacent areas of the Gulf Coast. It might have been politically popular and expedient but the aid to the places in trouble would have been too diffuse to do much good.
