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MADELEINE BRAND, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Madeleine Brand in California.

ROBERT SIEGEL, host:

And I'm Robert Siegel in Washington.

The housing crisis helped propel this country into the worst recession in decades and now we're seeing some tentative signs that the real estate market may be starting to recover. New numbers out today from a closely watched index show prices on the rise again, at least in some parts of the country. And that's on top of other recent data that also show more homes being sold. We asked our reporter Chris Arnold to put those numbers in context.

CHRIS ARNOLD: Boston, Charlotte, Chicago, Cleveland, Dallas, Minneapolis and San Francisco - what do they have in common? They're cities where home prices rose recently. That's according to the S&P Case-Shiller Home Price Index.

Professor ROBERT SHILLER (Yale University): This is the first time in almost three years that we've seen price increases. So when we see a break in the downward trend that's definitely encouraging news.

ARNOLD: That's Yale professor Robert Shiller. He helped to design the home price index and for a long time he was known as being a pessimist about the housing market. It turned out he was absolutely right. But now, Shiller is striking a different tone.

Prof. SHILLER: Well, I think the worst is probably behind us - the worst pace of decline. We were going down at two 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.

ARNOLD: Shiller stresses that he does not think we're about to see another housing boom. During this downturn, we've seen record drops in prices. And when it comes to new homes, it's been more than 50 years since we were building and selling so few of them. But over the course of this spring, sales have been picking up.

So look at that. We got a Century 21 sign here with a nice sold tag on the bottom, eh?

Unidentified Woman: Oh yay.

Ms. ANITA SHISHMANIAN (Realtor, Boston): That's always a pleasure to see.

(Soundbite of laughter)

ARNOLD: Anita Shishmanian is a realtor who just sold a condo in the town of Belmont, just outside Boston. This time last year, she'd have an open house and it was like she was at a funeral for somebody with no friends or relatives -just quiet and kind of depressing. But over the course of this spring, she's watched that change.

Ms. SHISHMANIAN: I had one not so long ago - a single family home - and had an open house and was swamped with buyers, real swamped. At the end of the day, I had something like five offers come in. I certainly do sense a turn.

ARNOLD: Shishmanian says she had a bunch of open houses like that. And she says she's been selling more homes again, and that's finally starting to put a dent in the enormous glut of homes that have been sitting on the market.

Ms. SHISHMANIAN: Inventories are dropping. So when that happens it's a pretty significant indicator that, you know, we're going to do a little bit of an upturn. Just to give you one number that I happened to remember from about this time last year: Condos in one of the local towns was - there were about 140 of them on the market then. This year there are about 89 condos on the market. That's good. We like to see that.

(Soundbite of laughter)

ARNOLD: I mean, as the supply drops…

Ms. SHISHMANIAN: Yeah.

ARNOLD: …you know the price can save a lot.

Ms. SHISHMANIAN: Right…

ARNOLD: (unintelligible)

Ms. SHISHMANIAN: Exactly.

ARNOLD: It's basic supply and demand. For a couple of years, there were just way more houses than buyers. And finally, the inventory is thinning out of a bit. Also, Shishmanian says an $8,000 tax credit for first time homebuyers is enticing more people. So, have we finally hit bottom for the housing market?

Mr. WILLIAM WHEATON (Housing Economist, MIT): Well, I think it very much depends on what city you're in.

ARNOLD: William Wheaton is a housing economist at MIT.

Mr. WHEATON: There are really two types of markets right now. There are markets where prices have taken a big plunge, 30-40 percent. So we'd certainly say California and Arizona and Florida.

ARNOLD: Wheaton says in areas like that, half of all sales are foreclosure sales at fire sale prices. And a lot of people are able to get very good deals on houses.

Mr. WHEATON: 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, yeah, pretty much so. I would - I would, you know, buy house for, you know, 50, 60 percent of what it was a few years ago, I'd buy it.

ARNOLD: Wheaton says there are many other markets, though, where prices have not fallen by that much. And he thinks some could still drift lower. Also of course, the local employment picture is really important and a big wild card in all this: foreclosures. They've played a very big role in driving down prices and keeping the market depressed.

Chris Arnold, NPR News, Boston.

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