Economy Watch: Median Home Prices Sink in 2010
The National Association of Realtors has its own melancholy home-price numbers to report; small-business owners are pessimistic about the future; and freshman members of Congress are frustrating those who have seen us approach a debt ceiling before.
By Dees Stribling, Contributing Editor
On the heels of a dour home-price report by Zillow on Monday, the National Association of Realtors had its own melancholy numbers to report on Tuesday, to the effect that home prices were down 4.6 percent from this time last year (more than Zillow estimates, which was 3 percent down). The U.S. median price, according to the Realtors, was $158,700 for a single-family property.
Condos took an even bigger beating. The 1Q11 median price for a U.S. condo, notes NAR, is $152,900. That’s 10.4 percent less than the median condo price during the same quarter last year.
Though their numbers and methodologies are different, the main takeaway from both Zillow and NAR is a crushing contraction in home prices that hasn’t leveled off yet. Foreclosed and short-sale properties are still snaking their way through the nation’s housing-market pipelines, putting downward pressure on prices. During 1Q11, distressed properties accounted for 39 percent of all residential sales, up from 36 percent in 1Q10.
Small-business owners not feeling so chipper
Owners and operators of small businesses were a little less optimistic in April than in March, according to the NFIB Research Foundation on Tuesday. The organization’s Small Business Optimism Index dropped to 91.2 in April from 91.9 in March. The baseline of 100 is from 1986, and small-business owners haven’t been that optimistic since late 2006. By 2009, the index was in the low 80s, so it has recovered somewhat since the pit of the recession.
Regarding inflation, a net 12 percent of those surveyed reported raising average selling prices, a 3 point gain from March and 23 points higher than last September. A net 24 percent planned hikes in average selling prices in April. A major force driving the price hikes, according to the respondents, is the elimination of inventory excesses that appeared in 2008, when consumers decided to raise their saving rate.
“Owners simply find no reason to be optimistic about the future, and therefore they find no reason to pick up the pace of spending and hiring,” says NFIB chief economist Bill Dunkelberg in a statement. “It’s difficult to know exactly why the outlook for small firms is in decline, but it’s a safe bet that political and economic uncertainty—about the deficit, the threat of inflation, rising energy and healthcare costs—are at top of the mind for most small-business owners.”
Would Mr. Smith vote to raise the debt ceiling?
According to U.S. News and World Report on Tuesday, “business leaders” are busy twisting the arms of various freshman members of the U.S. House of Representatives over the looming federal debt ceiling–trying to persuade the wet-behind-the-ears congressmen that refusing to raise the nation’s $14 trillion-plus ceiling will not, in fact, be a blow for fiscal responsibility, but rather a blow-up for the economy. “A lot of freshmen are new to the issue,” one unnamed source says politely, regarding politicos who apparently don’t know that Congress has been down this road before, with contentious debt-ceiling procrastination happening as recently as George W. Bush’s first term.
Reportedly, the freshmen are hearing that a default by the United States would spike inflation; double interest rates as U.S. debt is downgraded; and hit the stock market like a blackjack to the back of the head. It’s all still hypothetical, however, since the United States has never defaulted–though it’s been on the precipice many times, and Congress always votes to increase the ceiling.
Wall Street went on its merry way on Tuesday, with the Dow Jones Industrial Average ending up 75.68 points, or 0.6 percent. The S&P 500 gained 0.81 percent, and the Nasdaq advanced 1.01 percent.