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Housing prices look to have hit bottom

The two latest national home price reports are moving in different directions.

But they show that housing markets are bottoming out, according to a Colorado-based residential real estate analyst.

Home prices rose in August for the third straight month, according to the Standard & Poors/Case-Shiller home price index of 20 major cities, released Tuesday. The index climbed 1 percent from July to a seasonally adjusted reading of 144.5. While prices are down 11.4 percent from August a year ago, the annual declines have slowed since February.

But the Federal Housing Finance Agency said last week that home prices fell 0.3 percent from July to August and are down 3.6 percent in the past year, despite a 1.69 percent price increase during the same period in the Wichita Metropolitan Statistical Area.

Steve Murray, publisher of Real Trends in Littleton, Colo., says the studies' meaning is clear: Housing markets are bottoming out, but the impact of federal intervention in the market has destabilized many of them.

Murray said unit sales were up 9.2 percent in third quarter over the same period last year. But during the same period, average prices dropped 9.4 percent.

"What that tells us is that unit sales have bottomed out, propped up by the first-time homebuyer tax credit," Murray said.

But, Murray said, the federal government's intervention in the housing market has stimulated demand and caused inventories to dry up in cities where housing activity has been depressed.

"I've talked to brokers in California, Florida and Arizona, and they tell me that federal action is screwing up the market," Murray said.

"Demand is stimulated with the tax credits, but the federal and state governments are blocking inventory to the markets through loan modifications and moratoriums on foreclosures.

"You can go to some of the hardest-hit areas of the country, and they're out of inventory at the lower end of the market, where all the activity is in the first place.

"Modesto, Calif., for example, is out of inventory. Two months, with buyers stacked up and piling up on the sidelines because there's nothing to buy."

Those inventory numbers could shift — but probably won't in Wichita, said Willie Kihle, president of Prudential Dinning-Beard Realtors.

"One of the things we're wondering about is when the banks will dump their inventory on the market," Kihle said.

"It could very well be that nationally it could go the other way. We could have a glut of inventory if the banks act, although I don't expect to see that in Wichita because we're just not that negatively impacted."

Wichita's not immune to the market waves, Murray said.

"Another thing that I'm hearing is that every American has turned into a bargain basement shopper," he said. "They're only shopping for a deal.

"It will affect Wichita eventually because your consumer is the same person. They've been told there are deals out there and they're willing to wait."

Kihle said he hasn't seen a lot of bargain shopping.

"But certainly our buyers are influenced by what they hear in the media about all those good deals out there," he said.

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