More than five years after home values began their monumental slide from the heights of the real estate bubble, a recovery remains elusive.
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The latest survey from the National Association of Realtors shows the median sales price of an American home in the second quarter of this year was $171,900, down 2.8% compared to the same time last year.
Overall, prices fell in 109 of 151 metropolitan markets. Only New England showed an annual rise in housing values on a regional basis, rising 2%, to a median price of $245,600. The Midwest, South and West regions all declined, falling 5.4%, 2.7% and 3.1%, respectively.
Since the rapid decline in housing values slowed in 2009, home values have never added or lost more than 5% year-over-year.
"Median home prices have been moving up and down in a relatively narrow range in many markets, which shows a stabilization trend," NAR Chief Economist Lawrence Yun says. "Markets showing consistent price stability or increases are those with solid labor market conditions, such as in Washington, D.C.; San Antonio; or Fargo, N.D."
Part of the reason housing values can't seem to get on track may be the continuing glut of distressed homes. Short sales and foreclosures accounted for 33% of second-quarter sales, close to last year's figure of 32%. These "distressed sales" usually sell at a discount of around 20%. Investors appear to be snapping up many of those properties, accounting for 19% of homebuyers compared to 14% last year.
The dismal news in the Realtors' report carried over to sales volume, which fell 12.7% since the same time last year. That drop may be due in part to numbers from a year ago being artificially inflated; the first-time homebuyer credit expired April 30 of last year.
The expiration of the tax credit in the second quarter may explain the smaller percentage of first-time homebuyers in the market. First-time buyers accounted for 35% of the overall market in the second quarter of 2011, down from 46% the same period last year.
Yun blames flagging home sales in part on tighter lending standards. "With home prices in a broad trough and historically low mortgage interest rates, high housing affordability conditions and rising rents could stimulate a more rapid sales recovery if banks get back into the business of lending to more creditworthy borrowers," Yun says.
NAR President Ron Phipps seems to agree. "It's frustrating for many creditworthy potential homebuyers to realize that when they're ready to make a move, banks remain risk averse," he says. "People with good jobs, long-term plans and who are willing to stay well within their means deserve an opportunity to realize their American dream of homeownership. When banks return to normal and safe but sensible lending standards, housing will be able to contribute its traditional share to economic growth."
Still, the news wasn't all bad for homeowners. Some areas showed substantial price gains. After years of being hit hard by the housing crash, Cape Coral-Fort Myers, Fla., showed a 17.9% rise in home values. Elmira, N.Y.; Dallas-Fort Worth-Arlington, Texas; and Grand Rapids, Mich., rounded out the list of double-digit gainers, rising 16.1%, 12.5% and 10.9%, respectively.
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