Back Home Again (Part 2)

It turns out home prices aren’t so far from coming back after all.

Yesterday I wrote how housing activity usually picks up before housing prices do. Well yesterday we got
housing price data too, and it was pretty encouraging. The Case-Shiller index of home prices reported that
prices actually rose, on average, in May versus April. This is the first actual rise in the index in almost
three years.

It’s hard to see how the index could be higher if foreclosure sales are pulling down prices. It’s hard to
see how the prices can go up if banks are just dumping their unsold inventory on the market. It’s hard to
see why people would bother paying up for a new home if dirt-cheap foreclosed properties are widely

No, it must be that the combination of lower rates, government incentives, and consumer appetites are
creating enough demand to stabilize the market. And with the housing market stable, banks can value their
“toxic” assets and assess their true need for capital. The financial crisis may be nearly over.
And that, my friends, is also encouraging.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-12T10:58:05+00:00 July 30th, 2009|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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