Market Update

"I think we have turned the corner on prices," said David Blitzer, chairman of the S&P's index committee. "It looks very good."

"The best news on the housing front is that prices have turned," said Patrick Newport, U.S. economist at IHS Global Insight.

As you can see by the quotes above, home prices are on the way up. National home prices rose in June when compared to the same month of the previous year, according to the S&P index. This is the first year-to-year increase since back in september of  2010, in which the housing market was being affected by a federal home buying tax credit. In the 20 major metro areas that the S&P tracks, June was the second straight monthly increase in home prices for all 20. Foreclosures are on the decline and mortgage rates (below 4% all year) are lower than most people can remember them ever being. The National Association of Realtors stated that sales of previously occupied homes jumped 10% in July 2012 (compared to July 2011).

     So let's take a look at the big picture and what this all means for our economy as a whole. Since the bust of the housing market, home prices have fell which made homes worth less than the mortgages against them. Therefore, if home prices rise, there will be a greater ability to overcome the mortgages against them. If people are feeling wealthier due to the increased value of their homes, it will increase consumer spending. Since consumer spending is responsible for approximately 70% of our economy, the economy as a whole could see an upswing due to the home price increase. Also, when people start to see the value of their home increase there are going to be more homes for sale on the market, which in turn means that there is a bigger selection for potential buyers.

       As you can see from what I have been saying, the increase in home prices could potentially put a spark in the economy which would mean things are starting to get better. Only time will tell, so stay-tuned for the next market update!