Housing market may finally be bottoming out
A new single-family home under construction in Glenview, Illinois. For the first time in seven months, the housing market did not show a decline in prices.
Stacey Vanek Smith: Housing prices in March were up a tiny bit from the month before, but it is the first time in seven months we haven't seen a decline -- that's according to the Case-Shiller price index. Prices are still at very low levels.
Here to help us make sense of all this is Juli Niemann, with Smith Moore & Company in St. Louis. She joins us live. Good morning, Juli.
Juli Niemann: Good morning, Stacey.
Vanek Smith: So Juli, home prices, basically flat in March. What's your take on this news?
Niemann: Oh, this is high excitement. The hemorrhaging has stopped and the bottoming process has begun. There's no miraculous resurrection in sight, that's for sure. That would take a booming economy and we don't have that. Sideways is a good thing. Now everything is by location, so there is improvement in some regions that offset the decline in others. In fact, some of the declining regions are still going to go down another 5 percent, but the rest is stabilizing, and that's good news.
Vanek Smith: Well Juli, if we have hit bottom and prices are going to start to rise from here, what does that mean for the economy?
Niemann: Well for the banks especially, the banks are sitting on a pile of money to lend. We've got record low rates but they're not lending because you don't like to lend money on an asset that's still going down in prices. But the prices are at the levels of 10 years ago, this is a huge positive.
Vanek Smith: Wow, well the other big drag on the economy right now other than housing has been unemployment -- is that potentially turning around too?
Niemann: Well that is a wild card. It's picking up in the private sector. Corporations are sitting on a pile of cash though and recently their CEO's announced that they would not be buying more of their own stock. They are going to be spending it on plant equipment and that trickles down to unemployment. You are going to rises in employment over the summer, this is a real positive. Consumer sentiment, which is really cautious now, I think is going to start picking up.
Vanek Smith: Juli Niemann with Smith Moore & Company, thank you very much.
Niemann: You bet.