Finally…the housing bottom is in

The much awaited housing bottom…is apparently in. Today, the S&P Case-Shiller® home price index for April, 2009 showed, for the first time in almost a year, an actual increase in the average national home price. Now, the media didn’t exactly report the information quite this way, obviously because good news doesn’t sell as well as bad news. But, the fact is that year over year declines in home prices had escalated over the past year; reaching 18.7% on the March, 2009 index. The April, 2009 index showed only an 18% decline year over year. The index is somewhat difficult to understand, but the bottom line is that if you look at the average home price nationwide month to month, April was the first recorded increase in home prices in nearly a year. When you consider that this increase is occurring even as 50% of all sales are foreclosure sales, this is very encouraging. Imagine what the home pricing index would show if all the bottom-dollar foreclosures were taken out of the mix.

Speaking of foreclosures, don’t believe all the hype about a new wave of foreclosures coming later this year. It is true that more homes will slip into default as unemployed workers struggle to pay their mortgages. But, I believe that it is also true that Banks are very much aware that the market is bottoming, and that they stand a much better chance of getting the money they are owed if those homes are kept off the market, at least for now. If you think about it, it’s just smart business for the Banks. It’s like selling stocks; it’s just a “paper loss” until you actually sell. Because the Banks know that housing values are likely to increase over the next year or two, it is to their advantage to hold on to the assets rather than giving them away.

It’s unlikely that home prices will rebound substantially, at least for a while. But, it’s finally obvious that the long awaited bottoming of the housing market is finally here. Support the US Economy and go buy or build a home!