Real Price Increases for Real Estate

S&P/Case-Shiller Home Price Index Soars
For a moment, it was time to put aside fears regarding pending foreclosures, shadow inventory, unemployment and a disappearing federal tax credit. On Tuesday, the S&P/Case-Shiller index was released to pleasantly surprised analysts, showing 1.6% growth from June to July of 2009.

The gain was the largest monthly bump in four years, but prices remain over 13% lower in year-over-year numbers. If 2006 prices are considered square one, the market still has a ways to go to make a full recovery (three years, to be exact, as prices are roughly on par with 2003 levels again).

That said, prices rose for the third month in a row, and they did so in style, with 18 of the 20 metropolitan areas reporting gains. Earlier this month, pending sales from July numbers also beat what most experts expected. Given that the recent NAR report on August’s existing sales was slightly off, though, one wonders if July could have been the peak instead of the proof of recovery.

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Well, okay. Foreclosure inventory was running a little dry this summer compared with what it could have been had banks not placed a self-imposed delay on the processing. Whether the federal push to keep homeowners in their homes will help mute the impending storm those foreclosures hitting the market remains up for debate.

One way or another, shadow inventory eventually will play out as legitimate real estate offerings, and those that need to be sold (not homes offered up by homeowners testing the waters) should sell for less than they would have three years ago.