A closely watched economic index shows home prices in Cleveland took a big hit from August to September, dropping 3 full percentage points. ideastream's Bill Rice reports.
Cleveland's 3 percent decline - not seasonally adjusted - was the largest among the 20 metro areas measured in the Standard and Poor's Case Shiller Home Price Index. Only two metro areas - Washington D.C. and Las Vegas, showed any increase in home prices at all, and the average of all 20 showed a decline of .7 percent.
Many real estate watchers have been waiting to see whether the expiration of a home buyers' tax credit last summer would mark the end of an upward trend in home sales and prices. Stuart Hoffman, Chief Economist for PNC Bank based in Pittsburg, believes this latest index report leaves little doubt.
HOFFMAN: "In the three months right after the credit expired for both new and existing home sales, they dropped sharply. And now we know not only did the sale of the number of homes drop sharply, but the prices at which those homes sold, which is what this measures, dropped right back down. So I think it's pretty clear that the tax credit was a one time boost."
Maureen Maitland, Vice president of S&P Indices, which calculates the Case-Shiller Index, agrees. She says with such incentives now politically unpopular, along with a current glut of homes on the market and far stricter credit requirements, the real estate picture is likely to stay depressed until the economy overall improves.
MAITLAND: "You need for people to be out there, you need jobs, you need to have people buying homes, and you need demand to start to exceed supply. At this point in time we really see an excess of supply in most markets, and demand is simply not catching up, which is why home prices do remain weak."
But both Maitland and PNC's Hoffman caution against reading too much into Cleveland's precipitous drop compared to other cities. In past reports, they say, Cleveland has trended better than most of the rest.