Home prices up, for now anyway

No, it is just data manipulation. The FHFA uses only Fannie Mae and Freddie Mac loans, which has an upper limit of 523,750 in Middlesex and Essex and Norfolk Counties. That excludes a good number of houses in the greater Boston Area. Also, the low end of the market has collapsed, so we are now going to see more sales in each price tier; so it wouldn't be surprising if some people say home prices are rising. It may just mean that there are more sales in a certain range. Case-Shiller is the only true way to measure this.

Also, it is not a "pretty low point." Home prices are still too high to be sustainable. From what I can see, people who are buying now are the ones who either must buy; they got married, need more space, etc, or were priced out of the 2003-2007 market and are seeing all of these so-called “deals” that they are jumping on. There are people who already own homes who are now trading up, down, whatever. This is fine, but until we have our financial system under control, and all of the foreclosed homes sold and the foreclosure rate is back to “normal” the market is going to be crazy. When all is said and done, I don’t think prices are going to drop 75 percent, but I do think that we will see another 20-30 percent drop by the time this is over. It has happened time and time again. People just cannot afford these properties.

The FHFA index is a very narrow barometer. It is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. These are the same loans that have been heavily subsidized by your tax dollars in recent months, pushing rates all the way down to an absurd and clearly unsustainable 4.75%. It is therefore not surprising that prices have gone up on the relatively small subset of homes/buyers for which these loans are relevant... Inflate A, and the price of A goes up. Amazing.

I suspect this story will be very different for other types of properties that are not being propped up by our tax dollars. Others may disagree, but to me it looks like prices are still in free fall. We have much farther to go before we hit bottom.

Oh, and one more thing... The government can not avoid the day of reckoning. It can only postpone it. Long term, rates will go up. And when they do, home prices in the conforming market will collapse. Don't say I didn't warn you.

Thank you for mentioning YOY numbers!

For the Northeast region March 2009 compared YOY:

Sales DOWN 22.8%
Median Price DOWN 18.4% ($231k)

Of course the NAR just announced existing homesales fell in March, and prices fell year over year by 12% in March - the median house price dropped from 200k to 175k.

And half of all sales were foreclosures. As good news goes, that's pretty questionable

Even the NAR had trouble spinning todays announcement as good news for house prices.

Quote from a non-NAR analyst in regards to some signs of inventory stabilizing - "the number of existing homes on the market remains historically high, and prices will continue to fall rapidly "for the foreseeable future," he said."

Riiiiigggghhhhhttttt. These numbers are about as meaningful as the bogus first quarter earnings from Golden Slacks, BofA and all the other banks.

I am no expert by any means... but even though reports like this may be "innacurate" it will still inspire confidence in regular, non-informed people like me. That has to count towards something for the future of the housing market!
BTW - Currently debating selling our 1-bedroom house, or staying an waiting longer... baby on the way an could use more space... any advice on selling vs. waiting?

Home prices down, for now anyway

It’s too early to say when the housing market will finally hit bottom.

Conceivably we could be in for a couple more bumps and jolts before prices return to earth.

But Wednesday’s report by a key federal agency that housing prices fell again in February is certainly encouraging.

Wait - I just finished reading this article in your business section- I know this post was up first, but...

"Drop in home sales tugs at stock market
By Tim Paradis, AP Business Writer | April 23, 2009
NEW YORK --An unexpectedly large drop in home sales dashed some hopes Thursday that the economy is patching some its biggest wounds.
Stocks fluctuated after a 3 percent drop in sales of existing homes in March stirred worries that housing will remain a drag on the economy. The slump in demand for homes is making banks hesitant to lend because of worries they will lose money as home prices deteriorate.
The grim housing report at times overshadowed stronger-than-expected earnings reports from Apple Inc. and eBay Inc. as well as defense contractor Raytheon Co.
...
In early afternoon trading, the Dow Jones industrial average rose 1.27, or less than 0.1 percent, to 7,887.84.
Broader stock indicators were mixed. The Standard & Poor's 500 index rose 0.89, or 0.1 percent, to 844.44, and the Nasdaq composite index fell 2.60, or 0.2 percent, to 1,643.52.
The fluctuations came a day after stocks ended mostly lower on worries about the health of banks and concerns that the market has risen too fast since logging 12-year lows more than six weeks ago. The Dow is up 20.5 percent since then.
The National Association of Realtors reported that sales of existing homes dropped 3 percent to an annual rate of 4.57 million last month stirred worries that housing will remain a drag on the economy.
Ken Winans, president and chief executive of Winans International in Novato, Calif., said investors have been too quick to predict the end of the recession given the glut of available homes. "The root of the problem in this market has been housing," he said."

Scott, you're way behind the curve here. Of course the housing market has hit bottom. Esteemed economist Larry Yun called it 4 years ago!!!

August 2005 NAR: "All of the doom and gloom forecasts of a housing debacle are not only irresponsible, but also downright wrong."

April 2006 NAR: "We can expect a historically strong housing market moving forward, earmarked by generally balanced conditions across the country and fairly stable levels of home sales with some month-to-month fluctuations."

July 2006 NAR: "Right now we are on course for a soft-landing in housing."

October 2006 NAR: "The worst is behind us, as far as a market correction. This is likely the trough for sales. When consumers recognize that home sales are stabilizing, we'll see the buyers who've been on the sidelines get back into the market."

December 2006 NAR: "At least the bottom appears to have already occurred. It looks like figures will be improving."

July 2007 NAR: "Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year."

Feb 2008 NAR: Reuters reports that "The NAR's chief economist, Lawrence Yun, said the market is 'scratching the bottom,' with sales holding at a deflated rate of around 5 million units for the past several months."

April 2009 NAR: "We are close to the bottom, says Lawrence Yun, chief economist for the National Association of Realtors. Once home sales begin to rise that could boost home buying confidence and get others off the sidelines."

April 2009 NAR: The "worst may be over" in parts of the West, said Lawrence Yun, chief economist for the NAR.

JLM: "BTW - Currently debating selling our 1-bedroom house, or staying an waiting longer... baby on the way an could use more space... any advice on selling vs. waiting?"

Burn it down. Collect the insurance and move on.

Baghdad Bob (#10): Good stuff. A minor correction... I believe David Lereah was in fact the esteemed NAR economist who was responsible for those prescient calls made 4 years ago. He also wrote a wonderful book called "Why the Real Estate Boom Will Not Bust" (published in 2006) and is currently rumored to be a strong contender for next year's Nobel Prize in economics.

NEW YORK — The Northeast recorded the worst home sales and price declines of all regions in the country in March, the National Association of Realtors said Thursday, as layoffs exert a drag on the area's housing markets.
More good news for the bulls...

Northeast home sales dropped 20 percent last month from the year before, and median sales price tumbled 18 percent to $231,700.

Nationally, sales of existing homes posted an unexpected decline, falling 4 percent in March from a year ago, without adjusting for seasonal factors. The U.S. median sales price slid more than 12 percent to $175,200.

Hung Wang

@JLM #7

if you have no job, no job prospects or are worried about losing your job, all the "confidence" in the world won't inspire you to run out and buy a home.

Jobless numbers are bad and only getting worse.

Cheers!