Home Prices Stabilizing in Many Major Cities

   

People whose credit scores are sufficient to apply for an affordable mortgage may want to consider acting soon. Recent statistics suggest that home prices may be stabilizing after the freefall that characterized the earlier stages of the recession.

According to the latest Standard & Poor's (S&P)/Case-Shiller Index, home prices have shown signs of stabilization for nine months now, although they're still down on a year-over-year basis. For example, the index's 10-city composite was down 6.4 percent since last October, while the 20-city composite was down 7.3 percent for the year.

The new report indicated that for October, the annual rate of decline had improved over September's figures in all 20 metro areas covered by the index. However, on a month-to-month basis, only seven of those markets recorded price gains, which is helping to fuel a widely-held sentiment in the industry about another possible short-term drop in prices before the market fully recovers.

"Coming after a series of solid gains, these data are likely to spark worries that home prices are about to take a second dip," said David M. Blitzer of S&P. However, Blitzer went on to downplay such concerns by citing the relatively stable policies of the Federal Reserve and the greater strength currently being seen in the market for existing homes.

The report also noted that between the peak of the real estate market in the second quarter of 2006 and its low point in April 2009, prices in the 20-city composite were down 32.6 percent. San Francisco was cited for its seven consecutive months of price improvements, while San Diego, Los Angeles and Phoenix have also steadily reported gains since the summer. On the other end of the spectrum, Las Vegas continues to face major struggles with its housing market, with prices there having fallen for 38 consecutive months.

Another thing to consider when attempting to gauge the real estate market is the effect that foreclosed properties continue to have on the market. In some markets, these properties can still be obtained at a fraction of their previous cost.

Elsewhere, the perception of an improved real estate market and economy in general have helped bring about increases in consumer confidence as well. The latest monthly report from the Conference Board said that its consumer confidence index had risen to 52.9 in December, up from 50.6 in November. Lynn Franco of The Conference Board noted that, despite the gain, consumers are still pessimistic about their income prospects.

A report by CNNMoney.com noted that the latest consumer confidence gain was still smaller than many economists had expected, and that the number was still lower than the 54.5 that was recorded in August. Confidence, while trending upward, still apparently has a way to go, given that a reading above 90 on the index is generally seen as a sign of economic stability.

Despite lingering wariness about the economy, there's a perception about the housing market that the worst has passed and the buying opportunities are currently widespread. With that in mind, people whose credit scores are sufficient to secure a mortgage may want to consider getting into the market while prices are relatively low and while the federal homebuyer tax credit  remains in effect.