U.S. Home Prices have 1st Gain in 3 Years

by Coldwell Banker Evergreen Olympic Realty, Inc. on July 28, 2009

A widely followed national housing report shows that U.S. home prices notched their first month over month increase in almost three years.

The Standard and Poor’s/Case-Shiller Index for May reports a 0.5% increase in home prices from April. The report tracks prices in 20 major metro markets around the country. 13 of those 20 cities experienced increases in prices. While one month of positive pricing news does not a trend make, the large number of markets that showed gains is a good sign.

Some markets are fairing better than others. Boston, Dallas, and San Francisco all saw gains of more than 1%. Two of the country’s hardest hit markets, Las Vegas and Phoenix, were still dropping, down 2.6% and 0.9%, respectively.

The two cities in the report closest to Thurston County, Seattle and Portland, reported a change of -0.3% and 0.1%, respectively.

Locally, market wide home prices are still correcting. The average price dropped in June to $261,386, down 2% from May. In June of 2008, our average price was $279,543.

The correction in our local housing market started some 18 months after the rest of the nation, which means we might lag the positive news coming out of the rest of the nation. Many of the hardest hit parts of the country have seen, and needed to see, much more significant correction than our own market. (See related post on December 3, 2008). Perhaps now they can start to support modest gains again. The next several months’ reports will answer that question.

Looking back, we see that in many markets around the country, simply giving back the excess gains over historical trend line for appreciation was all the price correction that was needed. Once those market’s prices returned to the historic trend line sales started to perk up. In the hardest hit places, prices have dropped below that historic trend line. In places like California, there has been a huge jump in the number of sales. (See related post on July 23, 2009).

In our market, our average prices are coming back in line with our historical growth patterns. The chart below shows our actual average price versus the price taking out the bubble above our historic average annual gains. The two lines are steadily coming back together. No one can say for certain whether we will experience a technical bottom when the lines intersect.

Click image to enlarge.

However, it is important to remember that all these reports are market averages, which show the broader trends. The reports are often used to predict market-wide “bottoms.” While our local market may not yet be at its “market wide bottom”, every house has its own bottom. Many sellers are pricing their homes correctly and they are finding buyers today. Those buyers certainly aren’t waiting for the technical market bottom because they know they’d miss opportunity on those homes that are already bouncing back up.

Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.

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