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A Closer Look at Home Pricing Indexes

You might think that home values are on the rise if you read the headlines this week. It seems that almost every home pricing index is showing an increase over prices last year:

  • The latest S&P Case Shiller Index showed a year-over-year increase of 3.8%
  • Core Logic put the number at +2.6%
  • The RPX index showed a 2% increase

This may lead you to believe that the housing market is finally coming back and home values will again start seeing signs of greater appreciation. However, before we get too far down that road, let’s take a closer look at what each of the above mentioned reports have to say about future prices.

The S&P Case Shiller Index

“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.

Case Shiller is saying that maybe the Tax Credit did not increase the number of home buyers but instead just dragged demand forward. Inventory is up also.

The Core Logic Index

“The monthly increase in the index shows the lingering effects of the homebuyer tax credit. We expect that we will see home prices remain strong through early summer, but in the second half of the year we expect price growth to soften and possibly decline moderately.

The second half of the year doesn’t look promising to the people at Core Logic.

The RPX Index

In the second half of the year, a faltering economic recovery will send the RPX Composite price to new lows The downturn in the national economy will weaken demand for housing and further increase the supply of real estate owned by financial institutions, as more homeowners fall behind on their mortgage payments and lose their homes to foreclosure.”

Lower demand and greater supply will lead to ‘new lows’ in prices.

What does this mean to you?

If you are selling your home, realize that waiting for that ‘better offer’ probably doesn’t make sense right now. Your house is probably worth more today than it will be six months from now.


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