New data released Tuesday showed that the Twin Cities saw the biggest decline in home prices among 20 major cities across the country in January, with sales dropping 7.6 percent as compared to the same period in 2010.
The Standard & Poor's/Case-Shiller Home Price Index showed home values in the Twin Cities dropped 3.4 percent in January 2011 compared to December 2010. The seasonally-adjusted numbers for January show a smaller dip of 1.5 percent.
The news did not surprise state economist Tom Stinson.
"Over the long term we are not -- as anybody who owns a house and has kept track of how prices of surrounding and similar properties have gone -- we are not doing well," Stinson said. "Housing values are still continuing to decline."
A year ago, some analysts thought the Twin Cities housing market was beginning to rebound when housing prices briefly went up. But the Standard & Poor's/Case-Shiller Home Price Index, the leading measure of U.S. home prices, shows the opposite.
Stinson said until the job market improves significantly, the housing market will continue to suffer.
"We have had a larger decline in the construction industry in Minnesota than we have nationally," he said. "While we are not doing worse over the extended period since the start of the recession than the rest of the country, we are not doing better either -- I mean, the housing industry, the construction industry, the housing markets have just been hammered in the Great Recession."
Yet even with these latest bleak numbers, Stinson said the Twin Cities area is doing better than some metropolitan areas, where home values are below where they were in 2000, before the boom. In the latest study, only two markets of the 20 surveyed posted year-over-year price gains: San Diego and Washington D.C.
Brad Fisher, president of the Minneapolis Area Association of Realtors, crunched the Twin Cities median pending sales price in advance of the report, and what he found for January -- compared with a year ago -- was actually greater than the drop in values found by Case-Shiller.
"They were off a little over 7 percent, we were down over 10," he said.
One reason for the difference, he said, is the way the Minneapolis Area Association of Realtors counts sales. For instance, the association counts for all units -- pending and closed -- for sale in the 13-county metro, whereas Case Shiller looks at only single-family closed sales.
Fisher said more than half the home sales in January and February were lender-mediated, which includes foreclosures and short sales. That keeps values depressed. He's looking for a silver lining.
"It really depends on when the buyers' confidence level returns, and they are not afraid of prices dropping anymore," he said.
With prices and interest rates low, Fisher hopes that once the snow melts, more buyers will be out looking for a house.