Good news! Home prices rise in May

Posted Jul 29th 2009 12:00PM by Connie Madon
Filed under: Economic Data, Personal Finance, Housing, Recession

Here's some good news. Home prices unexpectedly rose in May according to the Case Shiller index that measures changes in home prices.

Some 13 of 20 metropolitan areas saw the biggest monthly gains. The four highest were Cleveland, San Francisco, Dallas, and Chicago.

Concerning the change in dynamics, David Blitzer, chairman of the committee at Standard & Poor's, which publishes the Case Shiller index, said: "This could be an indication that home price declines are finally stabilizing."

While home prices are still down 17.1% year on year, we've seen the slowest decline since prices peaked in July 2006.

If we put all of these factors together, we are now in the third year of our housing slump. In that time, prices have come down and inventory has been worked off. Investors and home buyers are seeing prices that are more affordable. That along with government incentives for first time buyers is triggering the emotional "buy" button. People are less afraid of taking a risk. Added to this are signs that the economy as a whole is stabilizing, and a better psychological tone that is forming in the minds of buyers.

Whether these trends will continue is up for grabs. Meanwhile, we have good news, and like success, good news feeds on itself -- i.e., good news leads to more good news because people start to believe in the future again.

Do you see home prices in your area stabilizing?

Tags: Case Shiller index, David Blitzer, housing prices, inthenews

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Reader Comments (Page 1 of 1)

7-29-2009 @ 12:51PM

Iridium said...

The price rise in Cleveland was due to higher cost homes going into forclosure and investors buying up whole blocks.

For the past year you could buy homes in the city of Cleveland all day long for $500-$2000. They started bulldozing those.

The overall price may have risen but after you cut out the BS the value of a home on the market being sold by a real person sold to a real perosn, not a bank, has still dropped.

Many areas are still above pre bubble prices. Still higher than the historical average if the bubble never happenned. So home prices are still too high.