New York- A widely watched index of US home prices fell 11.4% in January, its steepest drop since data for the indicator was first collected in 1987.

The decline reported in the Standard & Poors/Case-Shiller index indicates prices nationally have been slowing or dropping for 19 consecutive months.

The index tracks the price of single family homes in 10 major metropolitan areas in the US. The broader 20 city index also fell by 10.7% in January, the first time both indexes dropped by double-digit percentages.

All 20 cities have seen dropping prices for 5 consecutive months with declines growing in severity. Their biggest single month decline was reported by 13 of the 20 cities in January.

The worst performing markets are Las Vegas and Miami, each reporting 19.3% drops. Charlotte, NC was the only gainer at 1.8% in January.

PS

It's good news, bad news.  (Full story in this Seattle Times article.)

Landlords are happy: Seattle area rents rose faster than any other metro area in the nation (according to U.S. Bureau of Labor Statistics).  For 2007 (through November) rents rose by 8.4%.

Renters not quite so: A shortage of (new) apartments, strong job growth (high inbound migration) and a housing market that has buyers on hold has resulted in lower vacancy rates and increasing rents.

It is expected that 2008 will remain a tough market for Seattle renters.

RH

Piling on is not our style but this Daily News article is one of many in the press recently reminding us that a positive experience with craigslist is reliant on the good intentions of ALL its users. Such Utopian conviction, while refreshing, does not always reflect the reality of the New York City real estate market. The astute apartment seeker is best served by a wary nature and the professional assistance of an experienced real estate broker. Let the buyer beware indeed, but let them also have well informed representation.

PS

As reported earlier, new data from the Northwest MLS shows that the Seattle real estate market had a good year in 2007. 

The number of homes and condos sold was down significantly in the later part of the year, so it remains to be seen how long the fun is going to last.  For now, home appreciation in King County (which includes Seattle and its Eastside suburbs) was up 7.1% over 2006.

RH

So, the Seattle housing market is doing well, and attracting many GenY-ers (read: renters).  What does this mean for its rental market?

Currently it means a vacancy rate of only 3.8% (lowest since 2000).  As a result, rental prices are going up - as high as 12% in some local markets.  Vacancy rates for 2008 are expected to decline further - to the low 3% range, while rental prices will continue to rise. 

Not only is the migration of newcomers pushing up demand, the supply of apartment units is actually diminishing.  Condo conversions are still commonplace, with 7,000 units off the rental market in 2006 and another 4,000 units expected this year.  Compare that with development of new units; only 2,600 each for 2006 and 2007.  It will take until 2009 before a significant supply of new units will come on the market (between 5,000-9,000 apartments).

Rental assistance anyone?

RH

It is well reported that Seattle is one of the few strongholds in a nation of declining housing markets.  National Association of Realtors (NAR) Chief Economist Lawrence Yun recently wondered aloud if Seattle was "becoming a superstar market" - likening it to markets such as San Francisco and New York.

A panel of speakers at the 22nd Annual Forecast Breakfast hosted by the Western Washington Chapter of the Institute of Real Estate Management (a mouthful indeed) provided some clues on why Seattle's market is doing so well.  In short, the underlying economics are solid.  Seattle has:

• strong job growth that's outpacing the nation (and many high income jobs in e.g. IT)
• low (4.1%) unemployment compared to national averages
• robust population growth (mostly from people migrating to the area)
• relatively low new construction costs (though getting more expensive)
• booming commercial (3rd in nation) and retail real estate investment market (5th)

Economics aside, Seattle apparently has become a "hotspot" for GenY'ers.  Certainly its IT scene plays an important role.  As does its ecologically friendly reputation.

Don't tell everybody, but we're beginning to get some transportation problems similar to those other famed cities...

RH

While most real estate markets throughout the country are suffering from high inventories, cautious buyers and a credit crunch New York City, keeps humming along breaking records. The New York Times City Room Blog looks at whether that will continue or whether the same forces plaguing the rest of the nation will eventually catch up to New Yorkers.

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Sometimes the trend is your friend, and sometimes it’s not. Unfortunately the trend in mortgages rates hasn’t been friendly of late, as rates continued to move higher last week. On that front, the 30-year fixed-rate mortgage moved to 6.42%, the 15-year fixed-rate mortgage moved to 6.12%, while the five-year Treasury-indexed hybrid adjustable-rate mortgage moved to 6.19%, according to Freddie Mac’s weekly survey. Average points paid were 0.5.

Rekindled economic growth was one variable fingered for driving rates higher. Recent reports indicate that economic growth should continue, thanks to healthy consumer spending and improving business investment. Revised expectations now have the economy plugging along at a 2.2% annual pace this quarter and at a 2.8% annual pace by year’s end.

Resilient employment figures support the notion of continued growth: Employers in the US added 157,000 workers to their payrolls in May, keeping the unemployment rate at 4.5%. Meanwhile, average hourly earnings rose 0.3%, after a 0.2% increase the previous month.

Unfortunately, housing remains the potential spoiler in the economic scenario: The inventory of unsold homes is the largest since the National Association of Realtors started counting them in 1999. Federal Reserve officials, in minutes of their May meeting, expressed concerns that the housing correction could last longer than previously expected, potentially dampening household consumption.

PS

Bad weather and tightened lending standards conspired to drive the largest drop in existing home sales in nearly 20 years in March. Sales were down in all regions of the country. Opinions are mixed on how increasing foreclosures will continue to affect the market.

PS

Further advancing their march toward a market oriented economy, China moved this week to protect private property rights for the first time despite long delays and a great deal of opposition. Although passed quietly, this legislation could have a stunning impact and seems to indicate a weakening of the left.

Since Adam Smith, property rights have been considered a bedrock principle of, and central element to, capitalism. Communism argues that only collective ownership by the state will assure the minimization of unjust outcomes and the maximization of benefits, and therefore all, or almost all, private property should be abolished. The new legislation is a powerful repudiation of the old communist principles.

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