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By Jason Stipp | 02-23-2011 12:17 PM

Housing Market Could See a Near-Term Boost

In the near term, home prices have just as much chance of going up as going down, says Morningstar's Eric Landry.

Jason Stipp: I'm Jason Stipp for Morningstar. We got some housing data this week. Existing home sales were up, but home prices continued to decline. Here with me to talk about his take on where we are in the housing recovery is Morningstar's Eric Landry. He is an associate director of equity analysis.

Thanks for joining me, Eric.

Eric Landry: Hi Jason, thanks.

Stipp: So, a lot of the headlines based off that news that we got this week, they seem to say that the recovery is still slow, that we still have a long ways to go before we start to see some improvement--generally a pessimistic tone. I think they are keying off of the declines in home sale prices that we still continue to see. What are you seeing? Do you agree with that negative pessimistic assessment?

Landry: Well, I'm glad you asked. Let me take you back a couple of years here first. 2009, we put out a report in the springtime, telling the world that hey, Case-Shiller prices are going to go up in the very, very near future, and of course, everyone laughed at us. Well, it turned out to be right.

We're seeing basically the same thing happening now that we saw back then in 2009, and that is this: There is a pretty well-defined cadence in which cities move first and which cities follow, and you will have to look hard for this, but buried inside both the November and December reports, which are the two most recent Case-Shiller reports, we can see some of these leading cities starting to move in a direction that is upward, while the entire index is moving sideways to downward as you mentioned in the intro there.

So, that combined with some of the real-time data that we are seeing, which is actually good through mid-February, as opposed to December with Case-Shiller, is showing some positive signs, I think, and I believe, contrary to what you see in the news, all the pessimistic sentiment out there in the news, the analysts' reports and whatnot, I think there is at least as good a chance that prices go up here in the near term, as it is that they go down.

Stipp: So I know that we're also moving into a season where more people maybe looking to buy a home in that spring to early summer season. Do you think that there is going to be a boost from that? Are you seeing signs showing even if that season is mediocre, we will still maybe see prices increase a bit from where they are right now?

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