Commentary

Housing Prices No Longer in Free Fall

The newest numbers from the Case-Shiller housing price index (February 2009, released on April 28th) suggest that the housing market may bottom out within the next few months. According to the New York Times,

In February, the price of single-family homes in 20 major metropolitan areas fell 18.6 percent from the year earlier, compared with a record drop of 19 percent in January.

“Finally, we’re seeing a touch of moderation,” said David Blitzer, chairman of S.& P.’s index committee. “This is the kind of thing one might see if we’re beginning to see a bottom. I would not run out and celebrate, but I would not dig the bunker any deeper.”

Of course, the housing industry is still not out of the woods:

The Case-Shiller data show that housing markets across the United States are still suffering. Half of the 20 metropolitan areas in the index posted record year-over-year declines. In all, the 20-city index was down 2.2 percent from January.

From Atlanta to San Francisco to Chicago, not one of the 20 cities posted a gain in home prices from January to February, and values in all but five cities dropped by double digits from a year earlier.

The nearly 51 percent drop in Phoenix is not an isolated plunge. Prices in Las Vegas are down some 48 percent from their peaks. They are down 45 percent in Miami from their highest levels, and down 40 percent in Los Angeles and San Diego.

Ultimately, the resuscitation of the national economy will be necessary for the housing industry to revive itself.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.