By Dees Stribling, Contributing Editor
CoreLogic reported on Tuesday that its December Home Price Index (HPI) showed that U.S. home prices declined for the fifth month in a row. According to the company, sales prices nationwide–including distressed-property sales–were 5.46 percent lower in December 2010 compared with the same month a year earlier. Take distressed sales out of the equation and prices are still down, but only by 2.31 percent between December ’10 and December ’09.
Idaho took the largest hit in home prices year-over-year, with single-family sales prices imploding by 14.61 percent, though that would be only 10.41 percent lower if distressed properties are factored out. By contrast, a few markets saw year-over-year appreciation, such as North Dakota (up 5.53 percent), Hawaii (up 3.7 percent) and West Virginia (up 3.74 percent). All of those figures include the relatively few distressed sales in those places.
Still, CoreLogic’s annual data for 2010 showed that U.S. home prices stabilized relative to 2009, with the average annual HPI showing no change. That compares with a 12.7 percent decline between 2009 and 2008. “It was a bumpy ride that ended with a net gain/loss of zero,” Mark Fleming, chief economist with CoreLogic, notes in a statement. “Despite the continued monthly decline in home prices and year-over-year depreciation, we’re encouraged that on an annual basis we’re unchanged relative to a year ago.”
Small business owners a trifle more optimistic
In other index news, the National Federation of Independent Business said on Tuesday that its Index of Small Business Optimism rose 1.5 points in January. That’s a modest increase, opening the new year with a reading of 94.1. The slight overall uptick in optimism might have been higher, the organization posits, but it was blunted by small business owners’ apprehensions about the future and continued hesitancy to spend and hire.
Weak sales is still the most frequently cited top problem among small businesses. On the other hand, price-cutting is fading, and inventory adjustments to match lower consumer spending appear to be reaching a conclusion.
“Manufacturing and exporting are leading the recovery—industries and activities that are not labor intensive—while construction, an industry historically dominated by small firms, remains depressed,” says NFIB chief economist Bill Dunkelberg in a statement. “Recent political rhetoric favors small business, [but] it is belied by the actions of policymakers whose new policies and activities almost exclusively support big businesses.”
Nonbanks that are too big to fail
“Systemically important” banks–too big to fail, that is, generally over $50 billion in assets–have gotten a lot of attention in recent years, but there hasn’t been so much for “systemically important” nonbanks. That’s been the case even though, as AIG presumably proved, some of them are too big to fail as well. Now the Federal Reserve has unveiled a draft rule that would define what it means to be a systemically important nonbank.
It’s somewhat more complicated to define a systemically important nonbank than a bank, but the financial service firms that ultimately designated systemically important would be put under Fed supervision. Among other things, that would mean that they would be required to maintain more capital and liquidity than otherwise would be the case.
Wall Street had yet another positive day, perhaps happy that the Chinese are trying to restrain their bubbles (whatever they might be) with another interest-rate hike. The Dow Jones Industrial Average gained 71.52 points, or 0.59 percent, while the S&P 500 was up 0.42 percent and the Nasdaq advanced 0.47 percent.