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Real Estate Expert Sees Hopeful Signs

October 25, 2010 - PORTLAND -- A national report today that sales of existing homes rose in September signals an encouraging trend and suggests that falling housing prices are stabilizing, one of the country's top real estate forecasters said at an affordable housing conference here.

"The fact that it went up is very good news, because everyone thought it was going to go down," said Karl Case, co-creator of the Case-Shiller Home Price Index.

Case was in Maine at the state's annual Affordable Housing Conference. His visit coincided with the release this morning of the monthly home sales figures from the National Association of Realtors. They showed sales last month up 10 percent, or an annual rate of 4.5 million. In August, resales increased by 7.3 percent, or 4.12 million.

These figures are well below a year ago, when the annual rate stood at 5.6 million. And they have yet to capture the impact of the foreclosure crisis, which is expected to keep homes off the market in October that might otherwise have been sold.

But if October sales continue to rise, Case said, it will be an indicator that depressed prices and historically low interest rates are overcoming the chaos brought on by foreclosure moratoriums and government investigations.

"Housing is down 30 percent, and that's a hell of a discount on something you need to buy," he said.


Case is professor of economics emeritus at Wellesley College, where he taught for 34 years. The Standard & Poor's/Case-Shiller Home Price Index, which tracks 20 metropolitan markets, is a widely watched barometer on national home values.

The index is not reflective of activity in Maine, however, covering only Boston and New York in the Northeast. It has more relevance in markets such as Las Vegas, Phoenix and Miami, which saw the greatest erosion of values after the housing bubble burst.

Lately, though, Case has taken a personal interest in western Maine housing prices. His daughter, a professor at the University of Maine in Farmington, recently bought a home in the community.

In Maine, sales activity didn't follow the national movement. Sales were off 21 percent in September, according to the Maine Association of Realtors. The median sales price for an existing single-family home was up nearly 2 percent during the month.

Last month's figures continued a trend in Maine. Over the period between July and September, sales were down in Maine by more than 20 percent, while median prices rose 3 percent, according to the trade group.

September's increase comes after sales plunged in the summer, following the expiration of a federal subsidy for first-time home buyers. It marks the third month this year that the market has stood without the tax credit, which indicates that a healing process is taking place, according to the National Association of Realtors.

Case also sees that process evolving, but said he can't make a confident prediction for sales growth the rest of the year. A lot depends on how the foreclosure crisis is resolved and how long it takes, he said, because between 20 and 25 percent of all sales nationally are lender-owned properties.

Case is a strong believer in home ownership, however, and considers today's housing market to be a bargain, for people who can afford to make the investment. "Even with 9 percent unemployment and perhaps 15 percent underemployment, that means 85 percent of people still have steady jobs," he said.

By Tux Turkel tturkel@mainetoday.com
Staff Writer , Portland Press Herald

10/25/10


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