Housing Prices Drop, Not All Dire News
Recent reports have shown a drop in home prices in the Charlotte metro area. But that news may not be as dire as it sounds. According to both the S&P's Case-Shiller Home Price index and the November Update from the Charlotte Regional Realtor Association, home prices are down. The average sales price in November 2010, for example, was $215,000. This November, it is $192,000. However, Wells Fargo Senior Economist Mark Vitner believes those numbers need to be put into perspective. "The headlines look worse than the reality is," he says. Vitner says that the mix of homes being sold right now is more heavily weighted towards foreclosures and short sales. That is because the banking system today is healthier than it was a year ago. And as banks are becoming more capitalized, they are bringing more foreclosures to market. Another factor is that appraisals across the board are just more conservative now. So, he says there just aren't as many normal sales taking place. And that makes it appear as though home prices are falling even faster than they are. "And, unfortunately, that's going to continue for a while, because it's awfully tough to sell a house today given the tighter underwriting criteria that Fannie Mae and Freddie Mac are requiring," he says. "And also just the weak job market that we have." Vitner doesn't think we'll see home prices turn around until late next spring or even early summer. "And even then, we're not looking for home prices to come roaring back," says Vitner. He says that we're still experiencing the flipside of the housing bubble.