Integrated Asset Services LLC (IAS), a provider of default management and residential collateral valuations, has released the latest IAS360 House Price Index (HPI) which shows the index falling 2.6 percent across the first three months of 2011. With the first-quarter decline, U.S. house prices are now down more than 25 percent from their high-water mark touched four years ago. At period end, the IAS360 was standing at a level not seen since second quarter 2003.
Virtually every important measure of the housing market declined across 2011's first quarter, including all four U.S. Census regions, all nine census divisions, and all of the IAS360's largest metro regions. The continued slide has pushed both Las Vegas and Miami down more than 50 percent from the top of the market in 2007. Even the nation's wealthier areas took a turn for the worse this period, with eight of the benchmark's 10 wealthy counties reporting first quarter declines. All were positive the previous period.
"We look at the housing market all the way down to the neighborhood," said Paul Sveen, chief executive officer of Integrated Asset Services LLC (IAS), provider of the IAS360 House Price Index (HPI), "and there's just nothing good to see in this report. I have very real concerns the U.S. housing market is on its way to a new low."
Leading the way down this period were outsized declines in the two North Central divisions that comprise the Midwest census region. With the all-important Chicago metro area dropping 4.6 percent, the overall region fell a stunning 6.9 percent for the quarter, this following a slight gain the previous period. Similarly, the Northeast and West regions also turned negative, falling 3.2 percent and 3.7 percent, respectively. The South slid another two percent.
The West region, which includes three of the nation's hardest hit states—California, Arizona, and Nevada—is down nearly 40 percent from its high four years ago.
Foreclosures, meanwhile, are expected to rise to 1.2 million this year as many banks, spurred into action by federal regulators, are revisiting thousands of foreclosure cases. The fear that prices will fall further, coupled with stricter lending rules, promises to keep pressure on prices for some time.
"There are simply too many market factors weighing against house prices to correct the supply and demand gap in the near term," said Sveen. "Even if the economy is normalizing a bit, I just don't see any of the problems overhanging the housing market going away any time soon."
While the declines extend across the broad market, the U.S. residential housing market remains a highly local phenomenon—prices of homes and declines can vary significantly from one street to the next. At this time there are a limited number of tools that offer granularity of data at the neighborhood level. The IAS360 HPI, with its "next-generation" trending methodology, is able to identify market trends earlier than any other index. IAS data includes non-conforming, bank-owned, and conventional sales transactions segmented by property type in addition to those insured by the Federal Housing Administration (FHA) and the U.S. Department of Veterans Affairs (VA). The IAS360 HPI also considers real estate-owned (REO) transactions along with arms-length transactions.