S&P/Case-Shiller national HPI shows 4% fall in home prices

U.S. home prices fell 4.0% during 2011:

Data through December 2011, released today by S&P Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed that all three headline composites ended 2011 at new index lows. The national composite fell by 3.8% during the fourth quarter of 2011 and was down 4.0% versus the fourth quarter of 2010. Both the 10- and 20-City Composites fell by 1.1% in December over November, and posted annual returns of -3.9% and -4.0% versus December 2010, respectively. These are worse than the -3.8% respective annual rates both reported for November. With these latest data, all three composites are at their lowest levels since the housing crisis began in mid-2006.

Note: Only the national composite index really matters when measuring the national housing market. Ignore the 10- and 20-city indexes.

In addition to both Composites, 18 of the 20 MSAs saw monthly declines in December over November. Miami and Phoenix were up 0.2% and 0.8%, respectively. At -12.8% Atlanta continued to post the lowest annual return. Detroit was the only city to post a positive annual return, +0.5% in December versus the same month in 2010. In addition to the three composites, Atlanta, Las Vegas, Seattle and Tampa each saw average home prices hit new lows. ...

Translation: Washington, DC metro area home prices fell, too.

As I pointed out yesterday, Phoenix, Detroit, and Miami are dirt cheap, so the prices should rise. Las Vegas and Tampa are also dirt cheap, but apparently prices are still falling there.

“In terms of prices, the housing market ended 2011 on a very disappointing note,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “With this month’s report we saw all three composite hit new record lows. While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended.

“After a prior three years of accelerated decline, the past two years has been a story of a housing market that is bottoming out but has not yet stabilized. Up until today’s report we had believed the crisis lows for the composites were behind us, with the 10-City Composite originally hitting a low in April 2009 and the 20-City Composite in March 2011. Now it looks like neither was the case, as both hit new record lows in December 2011. The National Composite fell by 3.8% in the fourth quarter alone, and is down 33.8% from its 2nd quarter 2006 peak. It also recorded a new record low.

“In general, most of the regions also posted weak data in December. Eighteen of the cities saw average home prices fall in December over November. Seventeen of the cities have seen monthly declines for at least three consecutive months. In addition to both monthly composites, 10 of the cities saw home prices fall by more than 1.0% during the month of December. The pick-up in the economy has simply not been strong enough to keep home prices stabilized. If anything it looks like we might have reentered a period of decline as we begin 2012.”

To paraphrase Annie: The bottom, the bottom, I love you, the bottom. You're always a year away.

Warren Buffett is a housing bull

Billionaire investor Warren Buffett believes housing is a better investment than stocks right now:

Warren Buffett says along with equities, single-family homes are a very attractive investment right now.

Appearing live on CNBC's Squawk Box, Buffett tells Becky Quick he'd buy up "millions" of single family homes if it were practical to do so.

If held for a long period of time and purchased at low rates, Buffett says houses are even better than stocks. He advises buyers to take out a 30-year mortgage and refinance if rates go down.

His housing recommendation is likely based on the fact that mortgage rates are incredibly low right now. Nationally, home prices are no cheaper than their pre-bubble norm, although it varies depending on where you live.

I believe that some housing markets are far better buys than others. Cities with very high unemployment rates have dirt-cheap home prices right now. Places like Las Vegas, Phoenix, Detroit, and most of Florida have prices below their historical norms.

Government spending in context

Happy Valentine's Day, renters!

We get no respect, no respect at all:

In a survey of 1,000 single people, more than a third of women and 18% of men said they would much rather date a homeowner than a renter.

Ouch!

Only 2% of women said they preferred to date a man who rents, while only 3% of men said they would choose a woman who rents over one that owns her home, according to the survey, which was conducted by Harris Interactive for real estate site Trulia.

Both sexes also clearly prefer it when there's no roommate in the picture; 62% of survey respondents, men and women, prefer to date singles who live alone. ...

Trulia also asked which home features are the biggest turn-ons. Number one turned out to be a master bath. Men (64%) love that private sanctum almost as much as women (75%) do.

Walk-in closets were cited by 55% of men and 72% of women and gourmet kitchens got 51% of the male vote and 62% of the female. Hardwood floors, outdoor decks and home theaters also came in high on the list.