Are Home Prices Stabilizing?

September 1, 2009 No Comments »

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There’s been a lot of “good news” floating around lately regarding the housing market, but are home prices actually stabilizing?

A report today released by mortgage financer Freddie Mac said home prices increased in every region throughout the United States, the first time that’s happened in two years

Freddie’s Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series chalked a 1.7 percent quarterly gain, following a downward revised 1.5 percent drop in the first quarter.

And over the past year, home prices fell just 6.7 percent, less than the 8.5 percent annual decline recorded between the first quarter of 2008 and 2009.

Freddie attributed some of the improvement to the record low mortgage rates, but still, home prices in many parts of the country are at 2004 and 2005 levels, not good for those who bought in 2006 and 2007.

Additionally, that home price index only looks at purchase mortgage transactions; the firm’s other index, which factors in refinancing as well, revealed a 4.5 percent drop in home prices over the past year, up from a 3.9 percent drop the previous year.

But Freddie claims that “appraisals are backwards looking through the use of recent comparable property transactions,” so they typically lag changes in the purchase-only series.

Hmm…it’s hard to buy into the home price stabilization talk when values are still falling.

Then you factor in things like the shadow inventory, troubling unemployment numbers, and the fact that more higher-priced home sales are pushing the median home price higher, and it’s not so peachy.

Of course, you should focus on your own neighborhood and not the national numbers, because as we all know, real estate is local.

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