Metro Detroit home prices, boosted by a summer of short supply, rose 3.7% in September compared with a year ago, but are still well below normal, according to data released Tuesday.
That compares with a drop of 3.6% for the nation’s top 20 largest cities, according to the S&P/Case Shiller National Home Price Index.
The Detroit area and Washington, D.C., were the bright spots in the report for the third month running. The nation’s capital had an annual increase of 1% in home prices.
Home prices, bumping along the bottom for months, fell back to 2003 levels for the national composite in the third quarter.
Metro Detroit home prices were down 0.5% from August, but improving with a seasonal boost as compared with last summer when homebuyer incentives were skewing the data. Metro Detroit home prices are still at 1996 levels, however.
Three cities posted new index lows in September — Atlanta, Las Vegas and Phoenix, according to the data. Prices dropped by 9.8% in Atlanta from a year ago, Las Vegas prices were off by 7.3% and Phoenix was down by 6.5%.
“The plunging collapse of prices seen in 2007-2009 seems to be behind us,” said David M. Blitzer, chairman of the index committee at Standard & Poor’s. “Any chance for a sustained recovery will probably need a stronger economy.”
Dan Elsea, president of brokerage services for Real Estate One in Southfield, said he expects the home price indices to continue showing gains for the local market for the next three months since there is a lag of up to six months in the data. After that, he expects the data to show declines that the market is experiencing now.
“The dip is really a decline in the rate of increase, as opposed to a true decline in sales. With inventories of salable homes so low, we may see a bit of a strange warp where home sales slow a bit, but prices continue to rise as a result of low inventories,” Elsea said.
Elsea noted that inventories are at 2002 levels on paper, but they are actually much lower, since the condition of many homes for sale now is not enticing buyers because properties are distressed or not maintained or updated.
IHS Global Insight still predicts further price declines of between 5%-10% because of the backdrop of more distress. For example, 12.6% of homeowners with mortgages were delinquent or in foreclosure as of Sept. 30, according to the Mortgage Bankers Association.