Home prices in the Cleveland area rose from February to March according to a much-watched index, but the expiration of a federal home-buyer's tax credit may tamp down any momentum in the coming months. ideastream's Bill Rice reports.
Nationally, the the Standard and Poors Case Shiller index shows a DECREASE of a half a percent from February to March in the 20 metro areas the index tracks each month. David Blitzer, Chairman of S&P's Index Committee says, the weak economy and joblessness is fueling foreclosures and keeping housing demand - and prices - low, and even though there was some improvement in housing starts and sales in March, it didn't find its way to prices.
Blitzer: "In general, home prices are higher than they were a year ago but they don't seem to be going anywhere very fast."
Cleveland was one of seven metro areas where prices rose during the one-month period, and in fact, it had the highest increase - 1.8 percent. Cleveland never had a large run-up of home prices in the way cities like Phoenix did, and so has been more stable.
Blitzer: "If you compare from the peak to the very bottom, Cleveland came down by 20 percent compared to 56 percent, 55 percent for Phoenix. So Cleveland has been less exciting than Phoenix, and in this case is probably a little bit better off."
But what little good news there is in the Case Shiller report should be taken with a good helping of caution. A home buyers credit that has prompted many to buy over the past year - especially first-time buyers - expired in April, and the negative impact of that is expected to show up in future index tracking. Guhan Venkatu is an economist with the Cleveland Federal Reserve.
Venkatu: "Even though we see some improvement in the price trend and it's encouraging, the question is what will we see after some of the supports from the government are removed. And moreover, there's kind of a big backlog of homes that are both in or near foreclosure, and that just seems like it's not going to be very good for the housing market for not just months, but potentially years."
Bill Rice, 90.3.