Home Prices Are Recovering

The Case-Shiller Index was released Tuesday and shows an improving real estate market.  When is a 2.5% loss great news?  When it is compared to the 8.7% drop in Q3 of 2009.

According to Case-Shiller representatives, the housing market is “in better shape than it was this time last year,” but some of the summer’s momentum has been lost as many of the markets showed slight declines in value.

What is of note is the markets that didn’t decline — Detroit, Los Angeles, Las Vegas, Phoenix and San Diego.  They led the pack in the beginning of the downtown, now they’re leading the charge as the market recovers.

For a first-time homebuyer, this is encouraging news.  There are some flaws in the Case-Shiller Index that also need to be considered:

1. The data has a two-month lag
2. The sample data is just 20 cities
3. There is absolutely no such thing as a “national home value”—real estate is local

It is still the most widely used private sector housing index and does do a good job showing broader trends.  If housing brought down the economy, the signs are that a full recovery is just around the corner.