If this isn't a housing recovery, than I don't know what is. For the 6th consecutive month, the S&P/Case-Shiller Index posted strong numbers, a streak that dates back to February 2009. It comes 3 years after an epic collapse that left many wondering if housing would ever recover. It's clear now. Housing will most definitely recover. That said, we can't rely on the Case-Shiller Index alone to tell us that housing has recovered.
This is because the Case-Shiller methodology is fundamentally flawed.
First, it only accounts for 20 U.S. cities which, in turn, represent just 9% of the US population. If you live in one of the cities not covered by Case-Shiller (i.e. Cincinnati, Dayton, Columbus), Case-Shiller has no local meaning to you whatsoever. Omitting 91 percent of the population is a big deal.
But even if you do live in one of the 20 cities, Case-Shiller data is still kind of useless on a micro level. This is because the measurements clump individual city neighborhoods into one group of data. In Chicago, Lincoln Park and Rogers Park, and Andersonville and Bronzeville are all in the same sample set. Real estate doesn't work that way. Every neighborhood is unique.
That said, the Case-Shiller Index is still important. As the de facto barometer for home values nationwide, sustained strength in the Case-Shiller data means that the recession may be ending (or is already over).
Home buyers take note.
The combination of a soon-to-expire $8,000 First-Time Home Buyer Tax Credit and a rebounding housing market is creating intense competition for homes that may only get worse. Bidding wars seem common lately and that can have a negative impact on home affordability.
If you're thinking about buying a home right now or wondering if the time is right, according to Case-Shiller, the "right time" may have been 6 months ago -- before the string of increases. With values on the upswing, homes may only get more expensive.
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