WASHINGTON - U.S. home prices fell for a third straight month in nearly all cities tracked by a major index. The declines show that most homeowners are not reaping the benefits from some signs of an improving housing market.
Prices dropped in November from October in 19 of the 20 cities tracked, according to the Standard & Poor's/Case-Shiller home-price index released Tuesday. The steepest declines were in Atlanta, Chicago and Detroit. Phoenix was the only city to show an increase.
The declines partly reflect the typical fall slowdown after the peak buying season.
Still, prices fell in 18 of the 20 cities in November compared to the same month in 2010. Only Washington and Detroit posted year-over-year increases.
Prices in Atlanta, Las Vegas, Seattle and Tampa fell to their lowest points since the housing crisis began. And prices have fallen 33 percent nationwide since the housing bust, to 2003 levels.
"The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand," said David M. Blitzer, chairman of the S&P's index committee.
The Case-Shiller index covers half of all U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The November data are the latest available.
Home values remain depressed despite some hopeful signs at the end of last year.
Sales of previously occupied homes rose in the last three months. Homebuilders are more optimistic after seeing more people express interest in buying this year. And home construction picked up in the final quarter of last year, which helped housing contribute to broader economic growth.
Home prices tend to follow sales, which are still below healthy levels. And a large number of vacant homes are sitting idle on the market, which means prices will likely stay unchanged for several years, said Paul Dales, senior U.S. economist at Capital Economics.
"The most likely scenario in the U.S. is that in 2012 prices will bob around a bit, with one month's gain being reversed the next month," Dales said. "But in general, over the next couple of years, house prices will do nothing more than remain broadly stable."
Dales said prices might not rise consistently until 2015. He said lower unemployment and better pay raises are essential to a full housing rebound.
Among other improvements needed:
- The supply of homes for sale must decline further. The inventory fell in November to a seven-month supply, although a healthy supply is about six months.
- Sales need to rise consistently and more first-time buyers must drive the increases. First-time buyers stay longer and invest in their homes, which helps neighboring home values rise.
- More young people and immigrants must buy. Declining immigration and a rise in renting has hampered home sales.
- More than a million homes at risk of foreclosure must be cleared from the market. Many are in limbo because a government investigation into questionable mortgage lending practices, which has dragged on for more than a year.
- Banks must further loosen lending requirements.
Conditions are improving for those in position to buy a home. Job growth is up, prices are down, mortgage rates are at record lows and rental prices have risen sharply since the housing bust.
Still, many people can't afford to buy or are unable to qualify for mortgage. Some people in position to buy are holding off, worried that prices could fall even further.
Many economists say the U.S. could be experiencing what similarly occurred in Britain in the 1990s, when it took four years for home prices to rise again after falling prices left homeowners with little financial equity in their homes.
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Taking Inventory: Foreclosure Finds Across the U.S.
Case-Shiller: Home Prices Fell in Most Major Cities
Location: Trenton, N.J.
Average Foreclosure Discount: 67.8 percent
Sq. Ft.: N/A
Trenton ranks No. 1 on RealtyTrac's list of cities with the steepest foreclosure discounts. This single-family, whose price was slashed recently, represents one of the killer deals you can find in the city.
Dating back to the 1960s, this Cape Cod-style home offers three bedrooms and two baths. Judging by the average foreclosure discount of New Jersey, the home could be running as much as $150,000 below market value.
Average Foreclosure Discount: 49.67 percent
Price: $3.75 million
Sq. Ft.: 22,000
Foreclosed homes in Atlanta are selling for a staggering 50 percent off, according to data from RealtyTrac. This vacant Mediterranean mansion offers a rather excessive four kitchens along with amenities that include a home theater, pool, spa, steam room and elevator.
Average Foreclosure Discount: 48.14 percent
Price: $4.29 million
Sq. Ft.: 12,129
It may be hard to believe that $4.29 million is a below-market price, but given that this stucco Mediterranean is bank-owned and Houston's foreclosure discount approaches 50 percent, odds are that the home could be quite a deal for a well-heeled buyer.
Location: St. Louis
Average Foreclosure Discount: 54.61 percent
Sq. Ft.: 1,342
This brick-built home, which dates back to 1930, probably hit the market at a reduced price to begin with, but now is running even lower, having just undergone a price cut. The home offers stained-glass windows and wood flooring along with a spruced-up kitchen.
Pictured here is the home's updated kitchen. The residence is even more of a deal if you factor in its purported HomePath Mortgage status. That means if you've got the right credit, you could snatch it for as little as 3 percent down.
Location: Lansing, Mich.
Average Foreclosure Discount: 44.31 percent
Sq. Ft.: 2,228
Squeezed into a condo community, this historic home stands out in the neighborhood because of its stately portico. The home has a long residential tradition, but could go commercial if the buyer so chooses: The house can serve as an office, according to the listing.
Location: Grand Rapids, Mich.
Average Foreclosure Discount: 43.45 percent
Sq. Ft.: 4,339
You get a lot of bang for your buck if you buy this four-bedroom contemporary. Located on a cul-de-sac, the home spans a generous 4,339 feet and offers a three-car garage. At under $300,000, that makes it an affordable luxury residence.
Location: Flint, Mich.
Average Foreclosure Discount: 21.55 percent
Sq. Ft.: N/A
Purchase a foreclosed home in Flint and you're likely to enjoy the benefit of more than 20 percent off. While the city's foreclosure inventory doesn't offer deals quite as striking as those found in some other cities wracked by the housing crisis, the town's average foreclosed-home price still falls far, far below the national median (which hovers above $200,000). Flint's average foreclosed-home price is just $60,578. This well-landscaped home demonstrates how far just $110,000 gets you.
Location: Easton, Pa.
Average Foreclosure Discount: 41.17 percent
Sq. Ft.: 1,556
Alright! A listing description that levels with you. "This is a property that needs some work," it states. The home is not without its virtues, however: It offers ample space, three bedrooms and an attic. Furthermore, buyers can acquire 3 percent buyer's assistance if they make an offer by the 31st of this month.
One thing buyers should watch out for if they think about shelling out for these digs is that, as with many other foreclosures, there is no seller disclosure for buyers interested in this home. That means, unless you pay for a thorough inspection, you could discover hidden flaws after purchasing the place.
Pictured here is the home's open dining-kitchen area. The place seems to be in pretty good shape for a foreclosed home. Many fall into poor condition, succumbing to insect infestations or other symptoms of neglect.