Homebuyers Tax Credit Helps Home Prices Increase During May

Home prices improved in 15 of 20 areas across the country during May according to S&P/Case-Shiller Home Price Indices data released last week.

The 10-City Composite is up 5.4% and the 20-City Composite is up 4.6% from where they were in May 2009.

“While May’s report on its own looks somewhat positive, a broader look at home price levels over the past year still do not indicate that the housing market is in any form of sustained recovery,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “Since reaching its recent trough in April 2009, the housing market has really only stabilized at this lower level. The two Composites have improved between 5 and 6% since then, but this is no better than the improvement they had registered as of October 2009. The last seven months have basically been flat.”

Advertisement

“In addition, there may still be some residual impact from the homebuyers’ tax credit, since they affect any purchase that closes through June 30th 2010. We need to watch where the housing markets will go after these temporary stimuli go away. June’s existing and new home sales and housing starts data do not show much real improvement in those statistics either. It still looks possible that the housing market might bounce along the bottom for the foreseeable future, before showing any real improvement that will filter through to the rest of the economy.”

In May, Las Vegas posted a new index low as measured by the current housing cycle, where it peaked in August 2006. The peak-to-trough figure is -56.4%, with that market generally returning any gains it had posted since 2000. Detroit is the only market that is worse off. Its index is at levels last seen in late 1994, indicating that any appreciation in value during the past 15 years is now gone.

The Wall Street Journal published an interactive chart showing the latest data here.

Join the Conversation (2)

see all

This is a professional community. Please use discretion when posting a comment.

  • The information bears out how home appreciation rates differs in different parts of the country. While there have been significant increases along the coast in California, the same cannot be said about the inland or desert communities where the decline was perhaps the worst.

    Home sales are normally the highest during late spring and early summer. With the tax credit stimulus drained from the economy, no doubt both sales and prices will be impacted.

    Recently an individual who is heading up a new venture emphasizing the HECM for purchase program was cited as saying: “…the program has nowhere to go but up and that within a decade it will account for as much as 50% of the overall number of units as the baby boomers seek purchase their retirement home with a reverse mortgage.” Then later he responds with: “I really don't know if it will amount to 50% or some other percentage. I do know that many boomers (I'm now one!) will want to buy their final home and not have to make payments.” (It is interesting that one can suddenly become a boomer; I thought that happened at birth.)

    Under current home market conditions it seems we all question how quickly the HECM for purchase program will grow and to what volume level and percentage of volume it will grow. Placing a huge marketing investment or effort into the development of this product may be far too early to be effective, although some investment seems warranted.

  • The information bears out how home appreciation rates differs in different parts of the country. While there have been significant increases along the coast in California, the same cannot be said about the inland or desert communities where the decline was perhaps the worst.rnrnHome sales are normally the highest during late spring and early summer. With the tax credit stimulus drained from the economy, no doubt both sales and prices will be impacted. rnrnRecently an individual who is heading up a new venture emphasizing the HECM for purchase program was cited as saying: u201cu2026the program has nowhere to go but up and that within a decade it will account for as much as 50% of the overall number of units as the baby boomers seek purchase their retirement home with a reverse mortgage.u201d Then later he responds with: u201cI really don’t know if it will amount to 50% or some other percentage. I do know that many boomers (I’m now one!) will want to buy their final home and not have to make payments.u201d (It is interesting that one can suddenly become a boomer; I thought that happened at birth.)rnrnUnder current home market conditions it seems we all question how quickly the HECM for purchase program will grow and to what volume level and percentage of volume it will grow. Placing a huge marketing investment or effort into the development of this product may be far too early to be effective, although some investment seems warranted.rn

string(104) "https://reversemortgagedaily.com/2010/08/03/homebuyers-tax-credit-helps-home-prices-increase-during-may/"

Share your opinion