By Mark Huffman
ConsumerAffairs.Com
September 29, 2010
It's now painfully obvious to anyone hoping for a recovery in the
nation's housing market: the recent increase in home values was likely
artificial and temporary, a product of the now-expired first time home
buyer's tax credit.
The Standard & Poor's/Case-Shiller 20-city home price index reveals home prices declined 0.1 percent in July from June on a seasonally adjusted basis. However, the index is up 3.2 percent over July 2009.
Home prices crept forward in July, said David M. Blitzer, Chairman of the Index Committee at Standard & Poors. Ten of the 20 cities saw year-over-year gains and only one Las Vegas made a new bottom, as the impact of the first time home buyer program continued to fade away.
The year-over-year growth rates for 16 of the cities and the 10- and 20-City Composites slowed in July compared to June 2010. The 10-City Composite is up 4.1 percent and the 20-City Composite is up 3.2 percent from where they were in July 2009.
While we could still see some residual support from the homebuyers tax credit, which covers purchases closing through September 30th, anyone looking for home price to return to the lofty 2005-2006 might be disappointed. Judging from the recent behavior of the housing market, stable prices seem more likely, Blitzer said.
Better than last year
With Julys data, 10 of the 20 Metropolitan Statistical Areas (MSAs) are reporting negative annual growth rates on a month-to-month basis. But the numbers show that the market is improving when you compare it with 2009. With Junes report only five cities were negative on an annual basis Atlanta, Cleveland, Dallas, Denver and Portland all fell back to reporting declining annual growth rates. The three cities in California, Los Angeles, San Diego and San Francisco, showed the strongest annual growth rates of +7.5 percent, +9.3 percent and +11.2 percent, respectively; but these too are weaker than Junes numbers.
The next few months may give us an idea of the true strength of the housing market, as the temporary economic stimuli will have ended, Blitzer said. Housing starts, sales and inventory data reported for August do not show signs of a robust market, and foreclosures continue.
Still, housing experts say it may not be a bad time to buy a home, noting that both prices and interest rates are extremely low. In many markets, they note, the cost of owning a home is less than renting it. And with millions of people now unable to qualify for mortgages, rents will only go higher as many prospective home buyers will become renters, not by choice but by necessity.
