Washington Post Reported Housing Prices Continue to Climb

A Washington Post report this week revealed that while housing prices continue to slowly climb in many markets, consumer confidence has slipped nonetheless.

Citing the Standard & Poor’s/Case-Shiller index, the article disclosed that prices of single-family homes rose in most parts of the country for the third month in a row. In July, specifically, the 1.6 percent increase from June was the most significant one-month jump in more than four years.

Meanwhile, in a monthly survey by the private research group Conference Board, it was found that consumer confidence unexpectedly dipped in September – strangely, after improving in August (thought to be attributed to the government’s $8,000 tax credit for first-time homebuyers). While the results largely capture consumer attitudes, a board spokesperson said that they are “not as pessimistic as they were earlier this year.” The article acknowledged that the demise of the housing market in recent years has contributed to a decline in consumer confidence.

In order to boost confidence among would-be buyers, real estate experts are advised to hold off on the sale of foreclosed properties, as foreclosures tend to drag down prices. Interestingly, low prices appeal to consumers; and yet, are also known to contribute toward a decline in their collective confidence in the market. Additionally, a Bloomberg report alluding to the potential longevity of low interest rates suggests that lender, brokers and agents may wish to include references to low interest rates when marketing their services.

In fact, the Federal Open Market Committee (FOMC) lengthened its support for housing markets in its widely publicized Sept. 23 meeting, by committing to buy the full amount of a $1.25 trillion mortgage-backed securities purchase program; and, by extending the operation until the first quarter of 2010. The Fed also extended a program to buy up to $200 billion of housing agency debt. Whether or not this has a positive impact on consumer confidence remains to be seen.

Sources:

http://www.washingtonpost.com/wp-dyn/content/article/2009/09/29/AR2009092903690.html

http://www.bloomberg.com/apps/news?pid=20601087&sid=aTdQMTMs8XiA