Mixed Bag of Housing Data Shows Recovery — Except in Areas with High Foreclosures

http://moneyland.time.com/2012/04/24/mixed-bag-of-housing-data-shows-recovery-except-in-areas-with-high-foreclosures/?iid=pf-main-lede?xid%3Dgonewsedit&google_editors_picks=true

In housing, there may be a rising tide, but it isn’t lifting all boats. According to data released today by the Federal Housing Finance Agency, prices were up 0.3% in February from the month before on a seasonally adjusted basis. Even better, prices in February were up 0.4% compared to a year ago, marking a pronounced turn in the market, since it’s the first time the FHFA index has risen year-over-year since July 2007. The numbers would seem positive if it weren’t for the fact that the S&P/Case-Shiller index, the other major housing price report, came out an hour before and was lousy.

Prices in 15 cities in the 20-city index were down from the previous year, leading to headlines like CNBC’s “U.S. Home Prices Drop for Sixth Straight Month” and Forbes’ “Case-Shiller shows U.S. Home Prices Hit Fresh Lows in February.“

On closer analysis, though, the market — and the divergence between the two reports — isn’t as confusing as it appears. The FHFA index catches far fewer distressed homes than Case-Shiller does. So FHFA reads that prices for “average” areas, without a lot of foreclosures, have come down 19% since the peak, while Case-Shiller, weighed down by foreclosures, shows that prices have come down 35%.

In other words, if you live in Dallas, which was never really reamed by a lot of foreclosures, the market isn’t that bad. (According to Case-Shiller, prices in Dallas are flat). If you live in a market where there have been a lot of foreclosures — let’s pick on Las Vegas — it’s terrible, with housing prices continuing to slide (down 8.5% year-over-year).