U.S. home prices are flat, with Bay Area Showing Most Improvement

Prices overall see a tiny gain in October, a closely watched report says.

• San Francisco rises 1.7%,
• L.A. is up 0.7%.
• Tampa, Fla., has the worst showing.
• Las Vegas is still on the losing side.

San Francisco and Tampa, Fla., sit at opposite corners of the country and at opposite ends of the housing recovery.

As home prices are picking up nationally, the San Francisco Bay Area has shown improvement for seven consecutive months and posted the strongest gains in home prices in October out of 20 metropolitan regions, according to the Standard & Poor's/Case-Shiller index, a closely watched national measure of home prices, which was released Tuesday.

A moderate building pace and less aggressive lending during the boom years have helped the Bay Area gain ground, experts said, and some developers are buying up land and preparing building plans there.

At the other end of the spectrum lies Tampa, where home prices in October showed the steepest drop. The decline reflects a metropolitan area ravaged by the fallout of overbuilding and an economy that was heavily reliant on the building industry.

The stark differences between the two areas reflect the progression of the housing recovery: Clear winners and losers are emerging, even as concerns are growing that all regions could stumble anew next year as government support expires and foreclosures put pressure on prices.

The index of home prices in 20 metropolitan areas inched up 0.4% in October, but the relatively flat performance indicated that the housing recovery is faced with a chilly winter slowdown. Eleven cities posted gains on a month-over-month basis, eight cities recorded declines, and one was unchanged.

All 20 cities continued to show improvement on a year-over-year basis, with annual price declines moderating. The index was down 7.3% in October compared with October 2008 and was off 29% from its July 2006 peak.

San Francisco posted the strongest October price increase: 1.7%. UC Berkeley economist Kenneth Rosen said the Bay Area numbers have improved as bank-owned properties have increasingly made up a smaller percentage of housing stock for sale.

"We had a lower percentage of foreclosures," Rosen said. "We didn't have as much building, first of all, and we didn't have as much of the aggressive lending."

Unemployment in the Bay Area remains high, with San Francisco's jobless rate hitting 9.7% in November, but the dearth of housing stock has helped prices regain momentum, said Richard Gollis, principal at real estate consulting firm Concord Group.

As a result, developers are buying land for future opportunities, Gollis said."You are starting to see developer and capital-market interest in the Bay Area," he said.

Home prices in the Southland, which sustained one of the nation's biggest declines, have also risen, propelled by buyers eager to snatch up deals on deeply discounted foreclosure properties. Los Angeles was up 0.7% and San Diego, 1.1%.

"You might have thought that California would be one of the worst-performing states," said Robert J. Shiller, a Yale University economist and co-creator of the index. "But on the other hand, Californians have learned to think like real speculators over the years, and speculators know you buy when the news is still bad and market timing means you don't wait until the market starts going up."

Gus Faucher, director of macroeconomics at Moody's Economy.com, cautioned that though California's bigger metropolitan areas have improved, places such as the Inland Empire and the Central Valley are likely to continue to see trouble.

"It is the outlying areas that remain a problem," Faucher said.
On the other side of the country, Tampa-area home prices dropped 1.2% in October.

Similar to Tampa, Las Vegas is paying the price for its affair with overbuilding during the boom years. Las Vegas remains the one major metropolitan area in the country that has shown no sign of improvement this year, the index showed.

On a macro level, many experts worry that once certain policies and programs wind down -- among them low interest rates, tax incentives for buyers and an increased accessibility of mortgages backed by the Federal Housing Administration -- the housing market could again falter next year.

"All in all, this report should be described as flat," said David M. Blitzer, chairman of the index committee at Standard & Poor's. "Coming after a series of solid gains, these data are likely to spark worries that home prices are about to take a second dip."

Source:  Los Angeles Times, December 30th Article:  Alejandro Lazo

To Tax Or Not To Tax -

How will local governments respond to the current fiscal crisis?

As local governments in California struggle to survive the impact of the state’s current, ongoing financial meltdown, some may be surprised to learn that their city and county bureaucracies have no intention of raising taxes to bring in much needed revenue. In fact, for many local governments, it is the last thing on their lists.

At least, that is what they say in response to questioning. According to a recent survey by the California Public Policy Institute, California Public Policy Institute  more than 85 percent of the responding cities and counties indicated that they are very or somewhat unlikely to raise taxes to address their fiscal problems. On the other hand, the same respondents indicated that they are much more likely to address shortfalls by cutting back programs, imposing hiring freezes and eliminating positions. This still poses problems for real estate professionals. For example, according to the survey, planning and zoning services will experience some of the largest cuts at the county level.

However, if the recent past is an indication, local governments and their residents will have more new taxes in their future. According to the website, California City Finance.com  November 2009 municipal elections featured 57 measures concerning taxes, fees or bonds for cities, counties, special districts and schools. That represented exactly half the total number, 114, of local ballot measures during the election cycle.

Passage rates for the 57 tax and fee measures were similar to the passage rates in previous years. Nearly two-thirds of those requiring a majority vote, municipal tax measures, passed. Slightly more than half of the special tax and bond measures requiring a two-thirds majority vote were approved. Also, two-thirds of the school parcel tax measures requiring two-thirds vote and all of the school bond measures requiring 55% voter approval were passed.

Also of note, all five municipal parcel tax measures passed, but three out of four municipal business license tax measures failed.