Case-Shiller Index: Home prices post largest gain in a decade, just not in NY
Housing prices surged nationwide in March, but growth in the New York area lagged behind, according to Case Shiller Index data released Tuesday.
One reason for sluggish local growth was that prices here didn't fall as much as more speculative markets did during the crash. Experts also cited the impact of a shrinking Wall Street, New York's long foreclosure process, and superstorm Sandy.
Nationally, prices rose in March by 10.2 percent compared to a year earlier. That gain was the highest annual return since 2006, when the housing market was peaking. The biggest growth was in Phoenix, San Francisco and Las Vegas, where year-over-year increases topped 20 percent.
In the New York area -- defined as a 29-county region that includes Long Island -- prices rose by 2.6 percent, the smallest gain among 20 metropolitan areas covered by the index.
Prices on Long Island actually slipped in the first quarter from a year earlier, according to data published last month from a different source. The median Island home price, excluding sales in the Hamptons and on the North Fork, fell 2.6 percent, to $341,000 from $350,000, according to real estate appraisal firm Miller Samuel Inc.
The uneven recovery speaks to the disparity of the housing crash, experts said. While Phoenix is up 30 percent since the trough and New York is up 3 percent, prices in that Sunbelt city plunged 56 percent in the crash, while those in the local market fell 27 percent, said Craig Lazzara, an analyst at S&P Dow Jones Indices, which publishes the index.
"New York had relatively low decline in the deflation of the bubble," Lazzara said, "and so it had less to bounce back from."
Lazzara said the shedding of Wall Street jobs was also a factor. "New York, to a large degree, is influenced by the financial industry, and we all know that that industry is contracting," he said. "When one of the major industries affecting the area is downsizing or is shrinking more than it's rising, that inevitably is going to affect the demand for real estate."
Other factors that create a drag on area prices are a backlog of foreclosures due to the state's relatively slow legal process, and the fact that the housing market in suburban areas like Long Island is underperforming compared to urban areas, said Jonathan Miller, president and chief executive of Miller Samuel.
Other parts of the country also didn't have to deal with last fall's superstorm, said Kevin Leatherman, president of the Multiple Listing Service of Long Island. "Hurricane Sandy also skews the numbers," Leatherman said, "because you have houses that are physically distressed."