Dennis Norman
This morning S&P/Case-Shiller Index report for the 2nd quarter of 2010 was released showing that the home prices improved slightly over a year ago in 17 of the 20 Metro Area’s their reports cover.
The Case-Shiller Home Prices Indices showed an increase of 4.4 percent in home prices in 2nd quarter after a decline of 2.8 percent in the first quarter. As of the end of the 2nd quarter U.S. home prices are, on average, up 3.6 percent from the year before.
On a positive note, David Blitzer, chairman of the S&P Index committee, said “Ever with concerns about near term developments, we recognize that the housing market is in better shape than this time last year.” However, during a conference call I was on this morning with Mr. Blitzer as well as Dr. Shiller, Mr. Blitzer said “it’s not clear we are going to see this upward movement that we have seen in the past few months (continue).”
Home prices in the U.S. are, on average, about the same as they were back in 2003 according to Dr. Shiller. During the call this morning Dr. Shiller said that his company, Marco Markets, did a survey in August of economists and found that 80 percent of those surveyed expected a decline in home prices for 2010 however were generally optimistic about home prices going up modestly after that.
Professor Case stated a concern about the vacancy rate in housing which is hovering near record levels for both homes and rentals. He went on to say that in every recession since the depression one of the things that has helped bring the housing market out of the dumps is household formation which, as it increases, helps reduce the inventory of homes sitting around. He said it will be difficult to determine if their is growth in household formation presently or not until the 2010 census data is complete, however his concern is that we may not see much growth when the report does come out.
Dr. Shiller summed the housing market up by saying that now is “an exceptionally uncertain time.”
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