Home Prices in 20 U.S. Cities Rise for Fourth Straight Month

Nov. 24 (Bloomberg) -- Home prices in 20 U.S. cities rose for a fourth straight month in September, pointing to improvement in real estate that’s helping the economy emerge from recession.

The S&P/Case-Shiller home-price index increased 0.27 percent from the prior month on a seasonally adjusted basis, after a 1.13 percent rise in August, the group said today in New York. The gauge fell 9.36 percent from September 2008, more than forecast, yet the smallest year-over-year decline since the end of 2007.

Rising home sales, aided by government programs and a decline in mortgage rates this year, have helped stem the slump in property values that precipitated the worst recession since the 1930s. Home buying and consumer spending may still be hampered by higher unemployment, which may prompt more foreclosures.

“The worst of the rate of home price declines has passed but a strong recovery is not expected,” Steven Wood, president of Insight Economics LLC in Danville, California, said before the report.

Economists forecast the 20-city home-price index would decline 9.1 percent from September 2008, after a previously reported 11.32 percent drop in the 12 months ended in August, according to the median forecast of 30 economists in a Bloomberg News survey. Estimates ranged from decreases of 8.3 percent to 10.3 percent. Year-over-year records began in 2001.

Nineteen of the 20 cities in the S&P/Case-Shiller index showed a smaller year-over-year decline than in August.

Compared with the prior month, nine of the 20 areas covered showed an increase while 10 had a decline. The biggest month-to- month gain was in Detroit and Minneapolis, which both increased 1.8 percent.

Existing Home Sales

Existing home sales in October rose to the highest level in more than two years, National Association of Realtors data showed yesterday. The median sales price decreased 7.1 percent from a year earlier, the smallest decline in more than a year.

Housing has been among the industries leading to stabilization in the U.S. economy. To ensure the recovery in housing continues, President Barack Obama and Congress this month extended a tax credit of as much as $8,000 for first-time homebuyers until April 30, from Nov. 30. They also expanded it to include some current owners.

Concern about the looming expiration of the credit earlier this month weighed on builder sentiment and may have been the reason the Mortgage Bankers Association’s purchase applications index fell to a 12-year low in the week ended Nov. 13. The bankers group is scheduled to release last week’s applications report tomorrow.

Fed’s Pianalto

While the erosion of house prices is starting to end, it will take “a considerable amount of time” for the housing market to recover fully, Federal Reserve Bank of Cleveland President Sandra Pianalto said in a speech Nov. 17.

“Though we have seen some signs that the worst may be over, the housing industry is not out of the woods yet,” Pianalto said at a housing conference sponsored by the Ohio Housing Finance Agency and Ohio Capital Corporation for Housing. “Nor is the broader economy.”

Two risks to stabilization in housing are rising unemployment ands foreclosures. Foreclosures on prime mortgages and home loans insured by the Federal Housing Administration rose to 30-year highs in the third quarter, the Mortgage Bankers Association said Nov. 19.

Almost 23 percent of U.S. homeowners in the third quarter owed more on their mortgages than their properties are worth, according to First American Core Logic, a real-estate information company based in Santa Ana, California.

Unemployment Rate

The unemployment rate rose to a 26-year high of 10.2 percent in October, according to the Labor Department. More joblessness may lead to more mortgage defaults, bringing more foreclosed properties onto the market and pushing down prices. Higher unemployment will also limit demand.

D.R. Horton Inc., the second-largest U.S. homebuilder, on Nov. 20 reported a fourth-quarter loss that exceeded analysts’ forecasts and said the housing outlook remains difficult.

“The thing that drives our business the most is job creation,” Chief Executive Officer Donald Tomnitz said on an earnings call for analysts. “If we look at the macro economic environment, it’s not good for us.”

Karl Case, an economist professor at Wellesley College, and Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, created the home-price index based on research from the 1980s.

To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net Find out more about Bloomberg for iPhone: http://bbiphone.bloomberg.com/iphone

Ritz Carlton Condo Sells for 12.6 Million

Thought I would share this since this is the most expensive condo ever sold in Baltimore! Great News for the Real Estate Market!

http://wjz.com/seenon/inner.harbor.condo.2.1322995.html

My Latest Client Testimonial!

Magan,

Rory and I cannot thank you enough for the endless amount of work you put into finding us the perfect home. Your knowledge of the local area impressed us from the start, as did your expertise on the local real estate market.

Relocating from another city seemed overwhelming to us, but you quickly helped us to navigate the area and made us feel comfortable in our new surroundings. We appreciated your ability to relate to us and anticipate what we needed in a house currently, but also in the future. We could not have been happier with the outcome of this experience.

One of the most impressive things about you is your ability to address potential issues quickly and effectively. You were always available to us, regardless of your personal commitments. It was an absolute joy working with you and we truly feel we have ended up in an amazing home that we will enjoy for many, many years to come.

Thank you Magan!

Go to www.HomeFindBaltimore.com for a complete list of Client Testimonials. ~Thank you Emily & Rory!~

The Homebuyer Tax Credit Extended and Expanded!

Great News!

The Homebuyer Tax Credit has not only been extended, but it has also been expanded to include current homeowners. The following are features of the new bill:

-Deadline for current credit is November 30, 2009.
-Deadline for new and improved credit is April 30, 2010, as long as the home is under contract by that date; deal must close within 60 days.

Eligibility and amount of new credit:

-$8,000 for first-time homebuyers (those who have not owned a home in the last three years).
-Up to $6,500 credit for homeowners who have lived in the home they are selling, or have sold, as a principal residence for five consecutive years in the past eight.
-Buyers with income exceeding $125,000 for single and $225,000 for married couples are not eligible.
-Homes valued at more than $800,000 are also ineligible.

The pool of eligible buyers will increase and the program will be in place through the first half of 2010. This is a very positive event for home buyers, home sellers, and the Real Estate industry!