Is your home’s value higher today than it was 12 months ago?
For much of the country, the answer is “yes.” According to the Standard & Poor’s/Case-Shiller home price index, the national composite selling price was up 3.6% in the third quarter compared with the same period a year ago, and it was 2.2% higher than the second quarter of this year. Home prices were up 0.3% in September, making it the sixth consecutive month with an increase, and positive monthly returns were seen in 13 of the 20 cities S&P tracks.
And October is lining up for more of the same, according to data from the National Association of Realtors, released in late November. Its index of pending home sales rose 5.2%, exceeding most estimates and setting up for a potentially stellar sales season in spring 2013.
"With six months of consistently rising home prices, it is safe to say that we are now in the midst of a recovery in the housing market,” David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a statement.
A Long, Slow Climb
But hold on there, Blitzer. We’ve certainly come a long way from the depths of the 2008 housing crash, but just because things have stabilized doesn’t mean we are out of the woods just yet. In fact, some feel the recovery is on shaky ground, more a construct of loose government policy and cheap money than any sort of real fundamentals. Between January 2009 and August 2012, home prices in the nation’s 10 largest cities were down 2.4%, and we’re still down about 30% compared to the 2006 peak, according to S&P/Case-Shiller.
“Currently, housing is one of the few bright spots in the economy,” Barry Ritholz, CEO of FusionIQ and founder of The Big Picture blog, said during a late-November appearance on The Daily Ticker. “The problem with housing continues to be it’s not an organic recovery, or stabilization, to use a better word. The [Federal Reserve has] driven mortgage rates down to inconceivable levels.”
And, of course, all real estate is local, so there’s enough room for both winners and losers. The best property markets are currently centered in areas that were hard hit by the recession; some areas in California, in particular, have seen prices drop by more than 50% since the 2006 peak, making them ripe for deal-seekers, while the Rust Belt, deep South and parts of the Midwest continue to struggle.
The good news is that the results of the recent presidential election should bring some measure of certainty and predictability back to the housing sector overall. According to CNBC, incumbent presidents often see a boost in housing prices during their second terms, and the S&P/Case-Shiller national quarterly index rose by 2.6% during President Obama’s first term, leading many to predict the trend will continue through 2016.