Investment and Vacation Real Estate - Orlando, Florida

Home sales may be up in many parts of the country but prices continue to scrape along the floor, raising fresh doubts about the recovery of a critical sector.

Prices in 20 major metropolitan areas dropped by 18.7 percent in March when compared with the same month a year ago, according to the Standard & Poor’s Case-Shiller Home Price Index that was released Tuesday. That was about the same as February and just shy of January’s record plunge of 19 percent.

“Foreclosures have picked up, and that seems to be pushing prices down,” said David M. Blitzer, chairman of S.& P.’s index committee. “The recession is really biting.”

Seventeen of the cities tracked by the index declined from February. That was an improvement over the previous month, when prices in all 20 areas fell. Denver and Charlotte, N.C., managed tiny gains, while Dallas was flat.

In many urban areas, including those tracked by Case-Shiller, the residential real estate market is essentially cleaved in two. The top half of the market is largely stagnant, with owners unwilling to sell and buyers unable to buy. “Move-up” families seeking another bedroom or a better kitchen are an endangered species.

The low end, however, is sizzling, as investors armed with cash and first-time buyers equipped with tax breaks compete for foreclosed properties.

As a result, some argue, the Case-Shiller numbers make the market appear worse than it is. Minneapolis is a case in point. Prices there plunged 6.1 percent from February to March — the largest single-month drop for a city in the history of the index.

The area was not prone to the bubble excesses of California or Florida, but it has its share of foreclosures. Until recently, banks tried to hold on to these houses to get the best price, said Steve Havig, president of the Minneapolis Area Association of Realtors. complete story

Source: NYTimes.com - David Streitfeld

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