Housing Prices vs. Sales

The news, both locally and nationally, has been upbeat on housing recently. The stimulus packages from the feds has brought some welcome relief to the market, however they have expired. Now we look to see what will happen.

Well, from the sales standpoint, the news is positive and hopeful. However, those that study the market seem to be concerned. The concern: pricing.

Appraisers tend to look at the Case-Shiller Index to get a trend of pricing in their respective markets. The upbeat news on housing sales (both new and existing) seems to have kept consumers optimistic of their view of the economy despite the reports that home prices have been falling for the past six months.

Robert Shiller’s (co-creator of Case-Shiller and economist) seems to be concerned. In his words …”I’m worried still about the risk of a double-dip.” His concern reportedly is that the worst may be ahead of us. The fear is based upon weak job growth, tight credit and many more foreclosures ahead. Add to these the problems the European markets and its effect on the U.S. and it is exacerbated.

The most recent report of the 20 city metro markets studied showed that the first quarter of 2010 U.S. home prices fell 3.2 percent compared with the fourth quarter of 2009. Thirteen (13) of the cities fell, six (6) cities rose and one (1) was steady.

What seems to be disturbing to some economists is that increased sales as a result of the tax credits didn’t translate into higher prices.

We don’t pretend to be economists, however temperance is important. Yes, sales activity is up (incentives, spring surge, better outlook by people, etc) and yes, pricing has fallen from the overall index. However, don’t fall on your sword without first checking to see where the market is in our metropolitan area. Then you have to segment your market to see what is happening in your specific area. Bottom line, yes some sub-markets are falling yet some are not.

 

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