”Survey says” looks at various rankings and scorecards judging geographic locations while noting these grades are best seen as a mix of artful interpretation and data.
Buzz: House prices started 2022 with a dip in one-third of U.S. markets — including Los Angeles County — as rising interest rates, pricey options and shaky economics seemed to chill the pandemic era’s buying binge.
Source: My trusty spreadsheet reviewed quarterly median sales price stats for existing single-family homes in 185 metropolitan areas tracked by the National Association of Realtors. I focused on quarter-to-quarter price changes — instead of the year-over-year performance that inspired the “First Quarter of 2022 Brings Double-Digit Price Appreciation for 70% of Metros” headline on the association’s press release announcing the latest edition of these statistics.
Despite what you may be hearing about widespread pricing strength, the typical buyer paid less in 64 metros — or 35% of all markets tracked — between the first three months of 2022 and last year’s fourth quarter.
The declines were concentrated in smaller markets in the Eastern U.S. In fact, one of the Realtors’ four regional indexes — the Midwestern markets — fell 1%.
The weakest metro performance was in Rockford, Ill., down 11.3% in three months, followed by Akron, Ohio, down 9.7%, Topeka, Kansas, down 9.5%, Springfield, Ill., down 9.1% and Binghamton, N.Y., down 7.7%.
Among eight California metros in the study, only L.A. County had a quarterly decline of 0.7%. The nearest losing market was 1,300 miles east — Oklahoma City, off 1.6%.
And, yes, the Realtors’ overall U.S. price index did rise 2.1% for the quarter.
This is no anomaly. In fact, it’s an improvement over the end of 2021.
The fourth quarter saw even more falling prices as 104 metros saw declines — or 56% of the nation. California drops? Three of eight metros were down: L.A. County off 7.3%, San Diego off 0.6% and San Francisco off 3%.
Even the U.S. price index fell 0.7% with regional dips in the Northeast (5%), Midwest (4.5%) and West (0.2%).
And last summer, 36 metros had price declines — or 20% of the nation. California’s drops in the third quarter included three of eight metros: San Jose (2.9%), San Francisco (2.5%), and Orange County (0.9%). The U.S. price index rose 1.5% with no regional declines.
This same math also details the insanity of spring a year ago. In 2021’s second quarter, there was no quarterly price dips anywhere in the nation. The U,S, median rose 12.4% in those three months.
A few modest price drops are not a real estate catastrophe. Yet the home-selling industry is lucky that price discussions often center on year-over-year changes.
So, owners and their salespeople will focus on the fact that just three U.S. metros had price declines in the 12 months ended in 2022’s first quarter — Cape Girardeau, Mo., off 2%, Topeka, Kansas, off 1.9, and Rockford, Ill., off 1%. They’ll also cheer nationwide pricing that’s up 15.7% over that same period.
Measuring economic trends by looking at 12-month changes tends to smooth the ups and downs of any benchmark — whether the volatility is tied to seasonal variations, short-run impacts of events, or just noise in an economic yardstick. But this statistical softening can also delay the reality check that’s much needed by markets of any asset at inflection points.
Consider how Wall Street gyrations are viewed.
After a turbulent first three months this year, most investors focused on the Standard & Poor’s 500-stock index’s 5% decline between Dec. 31 and March 31 — the first quarterly drop since the 20% pummeling at the pandemic era’s start.
This pullback suggests share prices aren’t backed up by economic fundamentals. Inflation stresses household budgets and corporate bottom lines. Plus, pandemic, supply chain and geopolitical uncertainties zap confidence with consumers and CEOs alike.
Few stock investors revel in the year-over-year result: The S&P 500’s 15% gain between the first quarter and the same period a year earlier.
Let’s be honest. Real estate’s reality isn’t much different. Prices defy economic logic. All of Wall Street’s big-picture worries are amplified by homebuying affordability being slashed by the apparent end of the Federal Reserve-induced mortgage rate giveaways.
Do not forget house hunters are practical folks. At least those who are looking for a home and not an investment.
These people live in the here and now. They don’t search for shelter by spending lots of time thinking about what prices were a year ago. Price indexes adjusted for seasonality or inflation or length of ownership don’t change their budgets, mortgage rates or what’s on the market.
So early 2022’s softer pricing is welcome news.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]