Home prices firm up

In January the Standard & Poor’s/Case-Shiller 20-city home price index fell just 0.7% from last year on a seasonally adjusted basis, showing the smallest annual decline in almost three years.  The index reading of 146.32 was almost in line with analysts expectations, according to a survey by Thomson Reuters.  Better still, prices rose 0.3% from December to January, the eighth consecutive monthly gain. Among the 20 cities in the index, 12 rose.  “The housing market still has something of the blahs,” David Blitzer, an S&P managing director, told CNBC in an interview. “It’s a mixed report—one or two cities going better than last month—but overall ‘flat’ is probably a better description.”  The index, released Tuesday, is up nearly 4% from its bottom in May 2009, but still almost 30% below its May 2006 peak.  Many analysts expect that the Case Shiller number will eventually turn downward.  “It is only a matter of time before the index records a double-dip in prices,” wrote Pau
 l Dales, U.S. economist with Capital Economics, who forecasts a 5% drop. The market will be tested in the second half of the year, he wrote, when a tax credit that has boosted sales is gone.

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The Current Real Estate Market

The debate continues over the current slump, the recession and the recovery. Here’s what’s going on in northern San Luis Obispo county residential real estate on the central coast.

Residential single family homes in the towns have been very active in sales this year with more being sold in the first half of 2009 than the first half of 2008. This market is where the majority of the short sales and foreclosures have been. Prices are off considerably and it is a “buyer’s market” and homes priced at or below $300,000 are attracting multiple offers. But the headwinds in this market are appraisers and lenders. Appraisals are inconsistent and lenders are nervous. Federal rules and regulations are slowing the sales process and escrows often close late but most buyers are well aware of how much competition there is in this environment for buying a home. This market will have a good upside in the next decade.

Prices on country properties and executive style homes on acreage have come down a fair amount as the market continues to remain soft. High end home sales have doubled over the same period from 2008 but getting jumbo loans remains the biggest hurdle in this sector. The process of strengthening this market will take longer so there should be relatively good deals out there if you’re in the market for a purchase.

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