Dennis Norman
This morning S&P/Case-Shiller Index report for April was released showing that theannual growth rates of all 20 Metro Area’s their reports cover improved in April compared to March 2010. The 10-city composite is up 4.6 percent from the year before and the 20-city composite is up 3.8 percent from the year before.
However, in spite of this little bit of encouragement, David Blitzer, Chairman of the Standard & Poor’s Index Committee casts a negative light on the market by pointing out the, while this report does show some price gains, “many of the gains are modest and somewhat concentrated in California….moreover, nine of the 20 cities reached new lows at some time since the beginning of this year…”.
Tax-Credit Boost to Market-
Blitzer also stressed the impact of the homebuyer tax credit deadline on the market by saying “the month-over-month figures were driven by the end of the Federal first-time home buyer tax credit program on April 30th…eighteen cities saw month-to-month gains in April compared to six in the previous month.”
A Recovery Does Not a Tax Credit Make-
The Case-Shiller report shows results for April that, if fueled by a “real” market, may be sustainable but since it has clearly been fueled temporarily by the tax credits, it is not necessarily an indication that home prices have fully stabilized or that a housing recovery is underway. In the report Blitzer confirms this saying “other housing data confirm the large impact, and likely near-future pullback, of the federal program….recently released data for May 2010 show sharp declines in existing and new home sales and housing starts….inventory data and foreclosure activity have not shown any signs of improvement.”
When Will Home Prices and The Housing Market Stabilize? Where’s the Recovery?
Blitzer expects that it will be next year before we see “consistent and sustained boosts to economic growth from housing”. For what it’s worth, I agree…I don’t see much happening this year other than, hopefully, some markets finding their bottom and then beginning to stabilize.
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