Real Price Declines Swamping Nominal Home Price Trends: First American

That inflation monster investors are worried about? It may prove to have a strong bite on housing just yet, according to data released Monday morning by First American CoreLogic. A look at data spanning 957 core-based statistical areas nationwide, part of the Loan Performance Housing Price Index series, found that an overwhelming number of metropolitan areas are feeling inflation’s growing pinch.

“Two thirds of all states now show year-over-year real estate declines according to this latest LoanPerformance HPI release,” said Mark Fleming, chief economist for First American CoreLogic.

“Although only one-third of CBSAs are depreciating on a nominal basis, on an inflation adjusted basis, 90 percent of CBSAs are experiencing real price declines. Only 10 percent of CBSAs are experiencing real inflation-adjusted price increases.”

3-month pricing trends across the nation show very little in the way of gains. Click for larger view. (Source: First American CoreLogic)

The news that inflation is further hurting beaten and bruised housing markets nationwide is sure to trouble investors, many of whom have shifted their focus towards inflationary concerns in recent weeks.

The nation’s worst-performing housing market over the past three months, according to the CoreLogic data, is the Los Angeles-Long Beach-Glendale, Calif. MSA, which has seen prices fall by 7.41 percent in the past 3 months and nearly 22 percent in the past year. Cleveland-Elyria-Mentor, in Ohio, saw prices fall 7.38 percent during the three months ended March, CoreLogic said — providing an interesting contrast in the causes of housing woes.

Much of California is reeling from an overheated housing market that grew out of hand and is now struggling to re-establish a balance with personal incomes in the state, housing economists have said. But Ohio’s housing market has been long-suffering as a comparatively weak local economy and a historically high foreclosure rate has created what many housing economists would call a self-reinforcing downward cycle.

“The CBSAs with the largest declines continue to be in California, which accounted for nine out of the top ten CBSAs for price declines on a year-ago basis,” said Fleming. “Four CBSAs have declined more than 50 percent on a cumulative basis since their last peak in home prices and 48 CBSAs have declined 25 percent on a cumulative basis.”

For more information, visit http://www.facorelogic.com.

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