There's a reason people believe that real estate values always go up.
For 16 straight years, home prices appreciated to some extent every year, according to a measure known as the Case-Shiller Home Price index.
Tuesday, Standard & Poors issued
the newest version of the index
, and it shows "negative annual returns."
If we dissolve down the fine print, that means that nationwide, homes sold in the first quarter of 2007 were sold for less money than homes sold in the first quarter of 2006. Home price appreciation has ended.
(The graph doesn't show prices, but rates of change year-over-year. Click here
for bigger version.)
According to S&P:
This is only the second time in the quarterly national index’s history that the annual growth rate has fallen into negative territory.
The last time was in 1991.
Of course, this is a national index (3 measures go into it), and all real estate is local.
Are Manhattan Beach home prices now generally below 2006 levels? That's one big question MBC is trying to address over time.
Let's not pretend that answer is easy, either way. Everyone seems to know that the market has turned strange (many realtors call it "normal") and there is contradictory, confounding evidence.
Clearly, the news that appreciation has ended will affect future resales. Buyers will balk at big markups on homes that were recently purchased
, and they'll have even more reason to worry that their assets will depreciate, depressing their motivation – as if they weren't already hesitant.
MBC's next "Market Update"
will be out shortly, along with analysis of the Spring Bounce (Bounce?) west of Sepulveda. What the tea leaves suggest, we'll share.