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Home prices on a tear

By Judy Martel · Bankrate.com
Tuesday, May 28, 2013
Posted: 6 pm ET

Prices for existing and newly built homes are soaring and, in some cases, setting records, according to recent data from two sources.

The just-released monthly Standard & Poor's/Case-Shiller home price indexes report the highest annual increases in home prices since 2007 in the top 20 metropolitan markets. And a report from the U.S. Census shows that prices of newly built homes are 15 percent higher than they were a year ago, with the median price of $271,600 -- the highest it's been since the Census began tracking the data in 1963.

Annually, the Phoenix market leads the price increases in the Case-Shiller index, up 22.5 percent from a year ago. It was followed by San Francisco, with a 22.2 percent increase, and Las Vegas, with a 20.6 percent annual increase.

In March, home prices in the top 20 markets rose 10.9 percent. Only two markets -- Minneapolis and New York -- saw price declines in March, compared with eight markets that saw declines in February.

Home prices are still down nearly 30 percent from the peak bubble years and are currently priced at 2003 levels.

In the overall housing market, existing home sales are recovering faster than new home sales. Part of that is because of tight inventory in the new construction market. As homebuyer demand rises, look for prices to increase even further.

David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a release that recent housing market data support a strong trend in sales of new and existing homes, housing starts, and permits. "At the same time," he added, "The larger-than-usual share of multifamily housing, a large number of homes still in some stage of foreclosure and buying-to-rent by investors suggest that the housing recovery is still not complete."

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12 Comments
Silver T Rader
June 02, 2013 at 4:23 pm

It is a bigger bubble than before. Exactly the same bubble created by injection of freshly printed debt to subsidize banks. Measuring inflation by the decade old method (pre 2008) it is running over 5%. When Negative real-interest-rate end, so will this false "wealth effect".

There are less number of people employed, working less hours per week than 4 years ago. The Unemployment numbers are just so rigged it is laughable. People are doubling down with low interest rates and spending the "cash out". Savings and retirement funds are all much lower than 4 years ago.

It is better to buy when prices are low (i.e Interest rates are highest) and sell when prices are high to suckers who buy when interest rates are low. Sold my real-estate, buying Silver Mining Stock. Will cash that in later to re-buy cheaper real-estate... again.

Mike
June 01, 2013 at 6:50 pm

One of the most common mistakes of homebuyers is that they don't shop around. Don't borrow more to buy a previously owned home than what it would cost to buy an identical new home in the same metro area.

I don't care how low the interest rate is, hence the payments are, if you can't get what you owe on house when you sell, you will need to make up the difference at closing.

Brian
June 01, 2013 at 6:23 pm

Will we ever learn? I am through with owning property - pay rent, be a respectable tenant and let someone else deal with the headaches of ownership.

Hugh?
June 01, 2013 at 6:06 pm

Home values soaring? I think not! Home values slowly rising? I believe that. My house in the suburbs was upside down. I wouldn't know what it is now as it all depends on what someone wants to pay for it. Lets get real people!

NAF
June 01, 2013 at 2:58 pm

JNJ, thats my story, almost exactly.
Barrington area.
Took it off for awhile. We still have an empty forclosed house in our 'hood.
Wish that happy news would come this way.

JNJ
June 01, 2013 at 2:38 pm

HAVE HAD MY HOME FOR SALE IN WEALTHIEST SUBURB OF ILLINOIS FOR OVER TWO YEARS. ALREADY DECREASED PRICE BY 1.7 MILLION. HOME NOW LISTING FOR 800K LESS THAN REPLACEMENT COSTS AND STILL CANT FIND ANY INTEREST. WHERE ARE ALL THESE BIDDERS. MY HOME IS IMMACULATE WITH ZERO TO DO ONCE PURCHSED. I NEVER THOUGHT I WOULD BE STUCK WITH A HOME AND HAVE NO WAY TO GET OUT. ILLINOIS IS A JOKE...

mike
May 31, 2013 at 11:30 pm

Just curious, any idea what might happen to home values if the interest rate goes back up to 7-8%? I bought my home in 1994 with a rate of 8.5% and I thought that was a bargain. I just don't believe this will last.
feel free to comment. In the mean while Im just sitting back and watching the market.

In Northern Ca.

owner
May 31, 2013 at 2:29 pm

I spent 9 months and looking at thousands online and 40 physically. I bid on 26 and was out bed on all even though i bid 5000 or more over asking and got nothing until i took a 2 bd 1 bath with 2 car garage. That was in November it closed. It has increased in value 70,000 in the last 7 months. Not bad on a 120000 investment. There are no cheap homes left in northern calif.

syn
May 30, 2013 at 8:48 am

I never place much faith in the reports coming from the housing and auto industry sales/marketing professionals. Read between the lines--- housing prices are at 2003 levels. The title to this article suggests that housing markets are soaring, so buy now folks. It creates a frenzy(think multiple bids, sealed bids, the crazy stuff of the late '90's) that keeps the industry professionals happy, happy. Funny how just this past summer(pre-election) folks were pessimistic, unemployed, trying to save, curbing spending and now since the election and main stream media hype, the economy is booming. What did I miss in the past 6months? I'm still aggressively saving because I don't believe a word of it. Yes, color me skeptical, but I can sleep at night and have a cute little nest egg.

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