[caption id="attachment_33560" align="alignnone" width="420" caption="Is this house worth 25 percent less than when I bought it?"][/caption]

Seattle home prices have hit lows unseen since April 2005, according to a newsletter published by Redfin yesterday. Seattle's recent home price drops are among some of the more dramatic in the nation, according to analysis accompanying the 20-city S&P/Case-Shiller Home Price Indices, which released its latest info on Wednesday. While Case-Shiller is only releasing January data now—and sales and prices tend to pick up steam as spring heads into summer—the new figures are fresh reminders that we're still in a fragile real estate market.

Depending on how you choose to read the data, you can see positive news in the new Case-Shiller numbers—like the fact that home prices have had eight consecutive months of gains, as the Seattle Times notes—or bad news, like the fact that most cities in the index are still selling homes at prices about 30 percent below their peak levels.

Case-Shiller data functions as a sort of census of how the whole country is doing with this crazy real estate situation. Based on the latest monthly numbers for all 20 cities, as of January 2010, average home prices in the U.S. are similar to where they were in ... the fall of 2003. You know, back during the Bush Administration, before the iPhone and Twitter, back when Seattle was a two-newspaper town.

In other words, things aren't looking very cheerful—at least if you're comparing today's prices to those of yesteryear. For the 20 cities in the Case-Shiller index, June to July of 2006 represented the height of the market and August 2009 represented the trough. Between those two periods, the 20 cities together have seen prices fall 32.6%. During the months that have followed, recovery has been tepid: Case-Shiller says that the 20 cities' combined prices are still down 29.6% from their peaks.

The question, then, becomes: What prices constitute a "new normal" for the housing market? Is it possible that prices will never return to their prior peaks, and if so, when is that going to happen? Are eight months' worth of mild gains—albeit gains of less than a percent here and less than a percent there—a sign of an improving market, stabilization, or, well, of nothing at all?

Seattle has long been described as a kind of "last in, last out" case with respect to the economic bubble—a city where home prices took a little bit longer to rise, the real estate downturn set in a bit later, and the recovery is a bit of a wild card. Case-Shiller points out that Seattle—along with Charlotte, Las Vegas, and Tampa—belongs to a cluster of cities where prices peaked in 2006-2007 rather than earlier.  Since then, prices in metro Seattle have declined 24.6% as of January 2010.

The latest numbers provide more I-told-you-so ammunition for bubble watchers and those with housing schadenfreude. For those trying to sell, the stats provide yet another opportunity to "reset price expectations" with a real estate agent. And for those with a creepy habit of checking their own home values on sites like Zillow.com (guilty),  and seeing that the numbers are heading south and staying there, the Case-Shiller figures help explain what looks like a flattening-out of value at a newer, lower threshold.

The New York Times also reported on the new Case-Shiller data, noting that the last few months have not seen rising home prices and that homebuyer tax credits (extended to April 30) didn't necessarily help spur sales. The Times cites an analyst who posits that the U.S. housing market could see a "double dip" in housing prices, where gains are undercut by additional dips as numbers are adjusted for seasonality and the waning impact of tax-credit fueled buying is factored into the math used by the indices.
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