Richard's Real Estate Thoughts

First Time Home Buyer Stimulus helping to stabilize home prices

Encouraging news on home sales from Zillow and from S&P/Case-Shiller.

Median list price reported by Zillow - Equal number homes listed above and below.

 "The S&P/Case-Shiller Home Price Indices measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan regions across the United States."

This index has been tracking the steady decline of home prices since the peak in 2005-2006 to the present.  The quarterly decline in home prices from the 2^nd Quarter 2008 to the 2^nd Quarter 2009 was 14.9%. The positive sign though is that the 2^nd Quarter 2009 shows an increase over the 1^st Quarter 2009.

This is the first reported increase in three years, and as such is significant. The question remains though if the increase is a function solely of the incentives for home purchases: the tax credit, the historically low rates, and bargain prices. Is this sustainable?

Here are the percent changes from the S&P/Case-Shiller report for the two closest metropolitan areas.

Senator Bob Corker spoke to local REALTORS® this week that extending and expanding the tax credit is a possibility in the upcoming session, but the real issue is if the results of the stimulus are enough to end the price declines that have hindered the normal functioning of the market.

Foreclosures remain a problem as also unemployment.  These combine with other factors to keep inventories up and the number of potential buyers down.

These positive numbers though indicate the stimulus is producing the intended results of increases sales, reduced inventories, and as shown here stable or increasing home prices.