An abundance of inexpensive homes and a stabilizing job market are helping support housing demand, according to Dean Maki, chief U.S. economist for Barclays Capital:
Affordable home prices and the improving economy are doing more to lift sales than the tax credit. Consumers are becoming more confident about a major purchase such as a house. We’ll see a surge as buyers rush to close before the deadline, followed by a subsequent falloff. After that dip, we expect home sales to increase for the rest of the year.“We’ve turned a corner with housing," said economist Karl Case, who with Robert Shiller created the index. "As long as mortgage rates don’t jump and employment continues to improve, we should see housing play a key role in preventing a double-dip recession."
The Case-Shiller Home Price Index is based on repeat transactions and measures the appreciation or depreciation for same the houses as they are resold over time. Many agree that this index is probably one of the best measures of changes in home prices.
The performance of home prices obviously continues to vary widely around the country. During February, the 12-month gain in prices was strongest in the West while prices in Washington D.C. and Dallas rose moderately.
The data continues to point to an extended price recovery, a trend that the index first highlighted back in February.
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The markets seem to be shaky due to the debt problems of Europe. I wonder if this may be the EU's Lehman problem that will spill over to the rest of the world. Most of the "smart" economists, including Greenspan and Bernanke said the subprime crisis could be contained. Are we in for another unpleasant surprise?
ReplyDeleteBill,
ReplyDeleteNo doubt markets are shaky, they dislike uncertainty. Look for a few more days of uncertainty until German, IMF, and others clearly define the financial assistance package for those governments that continue to struggle.
I'd wager that by this time next month we will be hard pressed to find an economic headline on Greece, Portugal or Spain.