Twin Cities leads nationwide home price declines

Just Listed brings you the latest news and information from the Twin Cities-area commercial and residential real estate market and beyond from veteran reporters Jim Buchta and Janet Moore.

Twin Cities leads nationwide home price declines

Posted by: Jim Buchta under Buying, Foreclosures Updated: April 26, 2011 - 10:51 AM

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Foreclosures, like this one in Plymouth, put a drag on home prices during February. Ryan and Kristi Loeck, pictured above, made an offer on this one.

The Twin Cities fared worst of 20 top cities around the country, as home home prices dropped 3 percent between January and February, according to the latest Standard and Poor's Case-Shiller report. The monthly index, which tracks home prices in 20 major metropolitan areas, showed prices fell 1 percent nationwide in February compared to January. Adjusted for seasonal factors, the index declined 0.2 percent. Compared with a year earlier, unadjusted February prices fell 3 percent.

The price index for the Twin Cities metropolitan statistical area led the declnes both month-to-month and compared with last year. Prices were down 3 percent from January to February, and they were down 8 percent compared with 2010.

I talked with David M. Blitzer, chairman of S&P's index committee, and this is what he said about the broader market: "There is very little, if any, good news about housing."

Though the Twin Cities led the declines, Blitzer wasn't particularly alarmed. He said that over the past couple of years the Twin Cities has often performed better than average, and that prices are still almost 10 percent above the January 2000 index baseline, which means that if you bought a home then, its value would still be up about 10 percent. Atlanta, Cleveland, Detroit and Las Vegas were all below the January 2000 baseline in February.

Blitzer also said that the steep declines can be attributed to a small sample size. February is typically one of the slowest months of the year for sales activity. He said that the Case-Shiller data, which is often considered a leading indictor for home prices because it tracks changes in the sale price of the same house (it records sale pairs), includes foreclosures and short sales. It's impossible, however, to know what percentage of those sales were foreclosures.

February sales data from the Minneapolis Area Association of Realtors contains the likely explanation for the steep declines in the Twin Cities: During February, short sales and foreclosures represented 60 percent of all closed sales - a 40 percent increase over last year. Assuming a similar percentage of distressed sales in the Case-Shiller data, the report underscores the negative impact such deals have on home prices in the broader market.

Nationwide, all of the major areas saw prices decline from a month earlier.