"This is the first time in almost three years that we've seen price increases," says Yale University professor Robert Shiller, who helped design the home price index. "So when we see a break in the downward trend that's definitely encouraging news."
"Well, I think the worst is probably behind us — the worst pace of decline," he says. "We were going down at 2 percent a month for a number of months in a row nationally. That was really something. Now home prices relative to rents or construction costs are back at normal levels."
So have we finally hit bottom for the housing market?
"Well, I think it very much depends on what city you're in," says William Wheaton, a housing economist at MIT. "There are really two types of markets right now."
Wheaton says on the one hand, there are markets like Arizona, California and Florida, which have seen huge price corrections — down 30-50 percent — driven by a flood of foreclosure sales. Then there are other parts of the U.S. that haven't seen such big price drops.
In some places where prices have corrected sharply, a lot of people are able to get very good deals on houses.
"If you're in a market like California, where prices have fallen 50 percent and transactions have picked up and you ask your friendly professor 'Is this the bottom?' I would say pretty much so," Wheaton says." If you could buy a house [for] 50 percent of what you could a few years ago, I'd say go ahead and buy it."
Wheaton says there are many other markets where prices haven't fallen that much, and he thinks some could still drift lower. The local employment picture is also a significant factor.
[ PDF ] Standard & Poor's Case-Shiller Home Price Index, July 28, 2009
