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Things are looking up for home values

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Steve Chiotakis: It’s the second day in a row we’ve gotten some positive news about the housing market. Today, the Case-Shiller Home Price Index is giving us a glimpse of where homeowners and buyers were
at the end of September. Prices rose for the fourth straight month that month.

Marketplace’s John Dimsdale is with us live from our Washington bureau with a preview. Good morning, John.

John Dimsdale: Good morning, Steve.

Chiotakis: So what do you see?

Dimsdale: Well in general, home prices have now been rising for nearly half a year, and that’s an indication that the industry that was hit so hard at the beginning of the recession is coming out of a deep downturn. Falling prices for nearly three years were responsible for putting so many homebuyers either into or close to foreclosure. So even with these price hikes, nearly 1 out of 4 homebuyers remains underwater — meaning their mortgage is higher than the value of their home. And that just shows how much froth there was in the market before the recession. But after looking at today’s numbers, Mike Moran at Daiwa Securities says thinks are looking up:

Mike Moran: Many buyers see this as an attractive time to purchase a home, because interest rates are quite low. And after declines that we’ve seen in the prior two years, they’re starting to see value in housing as an investment.

Chiotakis: Hey John, so how do September’s numbers compare with the jump we saw in home prices earlier this summer?

Dimsdale: Well, the improvements are beginning to level off. September’s increase was 0.3 percent, that compares to percentage or more increases over the more active summer months. But Moran says a slower increase is to be expected in the fall, and he thinks it means that the improvements will be more sustainable.

Chiotakis: All right. Marketplace’s John Dimsdale in Washington. John, thanks.

Dimsdale: Thanks, Steve.

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