Commentary on the Real Estate Market as of October 2010
by Peter L. Zachary, MAI, MRICS
I am sorry to say there has not been much news in September regarding the Real Estate Housing Market. This may be in part because the housing market is fragmented between many local markets, some of which are doing better or worse than other local markets.
There were only two newspaper articles in September about housing. Both were in the New York Post. On September 20th, 2010, there was an article entitled "The Good Bad News on Housing." It stated that according to the Realty-trac the number of default on foreclosure notices fell by 1 percent from July to August 2010 and 30% from August 2009. It also stated that just five states - California, Michigan, Florida, Arizona and Illinois - accounted for more than half of all U.S. foreclosure activity.
On September 29th, 2010, there was another article on housing, again in the New York Post entitled "Housing Gains, but Consumer's Cranky." It stated: "Hopefully signs that home prices may have halted their free fall did little to ease sagging consumer confidence amid a weak job market. An authoritative index that tracks actual prices of homes sold in 20 major cities - the S&P/Case-Shiller index - showed yesterday that property values rose in 12 cities from June to July, including an 11 percent jump in San Francisco, a 0.6 percent rise in New York and even a 1.6 percent gain in dismal Detroit, where some vacant homes were plowed under to hide the blight. Economist Karl Case, a co-creator of the index, said housing prices are now "Bouncing along the bottom." "It's stopped the free fall we saw every month," Case told Bloomberg News. "I don't think anyone is predicting it's going to go up very much."
Meanwhile, consumer confidence during September nose-dived more than economists expected, dropping to a seven-month low of 48.5 in the Conference Board's sentiment index. A healthy reading is around 90. "Overall, consumers' confidence in the state of the economy remains quite grim," said the board's research chief, Lynn Feranco.
Separately, a CEO group, the Business Roundtable, said companies generally are using cash hoards for dividends and capital while shelving plans to spend on hiring and expansion.
Housing could remain flat for years but stable. "Anyone looking for home prices to return to the lofty 2005-2006 levels might be disappointed," said economist David Blitzer, chairman of the S&P Index Committee, adding that "stable prices seem more likely."
More to come next month.
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