Home Prices Inching Up – A Trend or Temporary?

Average home prices in the second quarter of 2010 have shown that across the board, and across the country, on average, home prices are trending higher. Of course, there is reason to feel optimistic, and many reasons to hope for that level of optimism, but before jumping on the proverbial wagon and dancing for joy, it’s important, as has been mentioned on more than one occasion, to understand the causes and potential underpinning that is going on with these numbers.

Numbers don’t lie

Analysts may tell us that numbers don’t lie. Of course, we are currently looking at numbers from the second quarter while we are deep into the heart of the third quarter already. From what many of us have seen in the past few years however, numbers may not lie, but they can be presented in such a light as to make a certain region, business, or organization appear to be performing better than it truly is.

Those of us who have been in the trenches of the housing industry and the mortgage industry for many, many years, know all-too-well about the price of vanity, and of overconfidence. There are countless tales of woe from individuals who assumed that the best was still yet to come and invested as though hardship was a thing of fictional tales and other industries.

So for a moment, let us play devil’s advocate and try to analyze precisely what this information, detailed below -courtesy of money.cnn.com- shows us, or indicates to us.

The market is acting as it should

Most experts now contend that the housing market across the nation is acting pretty much how it should be, that it is expected to remain relatively flat for the foreseeable future, as well. This might sound like it is in stark contrast to what many others have professed in the past, and there is good reason for that. When the housing market began to take its tumble, most of the industry professionals had never experienced anything quite like it. To be on the inside when the bubble burst, to pardon the overused terminology, was a novel and frightening concept.

Now, as the dust has settled and the bottom appears to have been reached, we are left with a fundamental issue of trying to calculate what the future holds for the industry and homeowners across the board. That, in itself, is a daunting challenge. However, that isn’t the only factor that is coming into play.

An economy that seems to be stuck in one place, unable to move forward and reluctant to slip back, is keeping many potential homebuyers from diving in and getting their feet wet again. Coupled with the onslaught of yet more foreclosures and the end of the government’s first-time homebuyer tax credit program, and we have a recipe that seems to spell out certain uncertainty.

Certain uncertainty

So, that term sounds fundamentally flawed, but at its core, it rings true on multiple levels and throughout multiple dimensions. Currently, we cannot expect much from the housing industry as far as recovery is concerned. The best we can do is to be honest with prospective buyers and sellers who tepidly toe the waters of this seemingly calm and unmoving sea and let them know that the prices are not gaining as they had in the past, and may never see profit margins like those again, but that real estate, no matter where you live, is still and will always be one of the best investments anyone can make.

That might stir some more interest in home buying again.

NAR 2nd quarter 2010 home prices†
Single family homes

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