Our Real Estate Blog

The good news:  Home starts have risen for five straight months, while sales of new homes recently hit their highest level since last September.  Prices are up as well: the Case-Shiller index of national house prices rose 2.9% in the second quarter, ending a three-year decline.  According to Toll Brothers’ chief executive officer Bob Toll, “declining cancellations and more solid demand indicate that the housing market is stabilizing."  The bad news:  According to many skeptics, things are not so rosy.  Mark Hanson, who runs a California real estate research firm, attributes the much-ballyhooed recent house price gains to a shift in the types of properties changing hands.  At one point earlier this year, as many as half of all transactions nationally were resales of foreclosed properties, largely at low prices.  Since then, so-called organic sales (those not involving distressed properties) have risen while foreclosure sales have remained stable. 

This improved mix -- togethere with cheap financing and a couple of popular tax incentives -- helped to revive prices in some hard-hit areas.

But with schools opening up again and the summer home-selling season winding down, sales by nondistressed sellers are likely to fall in coming months, Hanson said.  Adding to the pressure on prices, the end is in sight (or already here) for some popular housing subsidies.  An $8,000 federal tax credit for first-time home buyers is due to sunset at the end of November.  A $10,000 California tax credit for buyers of newly constructed houses expired last month.  Says Hanson: "This summer is shaping up as the gateway into the next move down."