Real Estate Week: Bay Area Leads U.S. in Home Price Gains; Homeownership Still Lags
Here’s a look at news this week of interest to homebuyers, home sellers, and the home-curious:
BAY AREA NO. 1 FOR HOME PRICE GAINS
The Bay Area leads the nation in rising home prices over the past three-and-a-half years, according to statistics the Wall Street Journal compiled from the monthly S&P/Case-Shiller Home Price Index.
Home prices in the San Francisco metropolitan area were up 9.6 percent in July compared with January 2009. That’s far better than the national average over the same time period, during which home prices fell 3.7 percent among the nation’s 20 largest metro areas.
The Journal chose the odd time frame of three-and-a-half years in an effort to answer the politically charged question of whether the U.S. housing market is in better shape after nearly four years with Barack Obama as president.
The Journal noted that home prices are up from one year ago but remain narrowly below the recent peak set in May 2010, when tax credits fueled a brief burst of sales.
Trailing San Francisco in rising home prices were Washington, D.C. (8.4 percent) and Denver (4.6 percent). The biggest declines were in Las Vegas (24.7 percent), Atlanta (18.5 percent), and Tampa (12.1 percent).
The San Francisco metro area includes Alameda, Contra Costa, Marin, San Francisco, and San Mateo counties.
PRICES CLIMB 5.3% IN ONE YEAR
Speaking of the Case-Shiller Home Price Index, the Bay Area housing market continues to pick up momentum, with the latest proof coming from the aforementioned monthly index.
Home prices in the San Francisco metropolitan area rose 0.5 percent in August from the previous month and 5.3 percent from August 2011, Case-Shiller reported on Tuesday. Only five other metro areas topped San Francisco in year-over-year sales gains: Phoenix (18.8 percent), Detroit (7.6 percent), Minneapolis (7.4 percent), Miami (6.7 percent), and Denver (5.5 percent).
On average, August marked the fifth staight month of rising home prices across the nation.
The Case-Shiller index lags two months behind the current statistics, but it remains one of the most closely watched gauges of housing market health – one of several gauges that have turned upbeat in recent months. New and existing home sales have gained strength, inventory of homes for sales have fallen, and developers have stepped up building activity.
HOME OWNERSHIP RATE REMAINS LOW
Americans remain wary of home ownership as the nation slowly recovers from the housing market collapse, acoording to the U.S. Census Bureau.
The agency reported Tuesday that the nation’s home ownership rate was 65.5 percent in the third quarter, down from 66.3 percent a year earlier. But the rate was unchanged from the previous quarter, a sign that the drop in ownership may have hit bottom, as record-low mortgage rates lure consumers back into the housing market.
Today’s ownership rate is well below rates near 70 percent reported during the housing boom.
NEARLY $2 TRILLION IN EQUITY LOST
Foreclosures have drained nearly $2 trillion in home equity from surrounding neighborhoods across the country, according to a report from the Center for Responsible Lending.
The report determined that residents who live close to foreclosed properties have lost $1.95 trillion in property value. The cost does not include the total loss in home equity resulting from the foreclosure crisis, estimated at $7 trillion, and also does not take into account the equity lost by families who are actually foreclosed on.
African-American and Latino communities are seeing the greatest share of the $2 trillion loss, where the average spillover cost per family is estimated at $37,000 in household wealth.
(Photo courtesy of Greg Balzer, via Flickr.)