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Home prices jump 9.7 percent from last year, biggest gain since April 2006

- The Washington Times - Tuesday, March 5, 2013

U.S. home prices rose in January and may be poised to post further gains in the coming months as the nation’s glut of foreclosures continues to decline, according to a report released Tuesday. 

Home prices across the country jumped 9.7 percent from the previous year, for the biggest annual gain since April 2006, according to CoreLogic, a real-estate, data-analysis firm. 

Housing values also ticked up 0.7 percent from December, during a time in which home sales usually slow for the winter and prices decline. It was the 11th consecutive monthly increase, following an 8.3 percent boost in December. 

“With these gains, the housing market is poised to enter the spring selling season on sound footing,” CoreLogic chief economist Mark Fleming said in a statement.

CoreLogic forecasts year-over-year growth of 9.7 percent in February, but a slowdown from January of 0.3 percent.

Home values are going up, because there are fewer homes for sale, according to Daren Blomquist, vice president of RealtyTrac. 

“The limited supply is fueling the demand from prospective homebuyers,” he said. “Buyers are starting to get nervous that they may be missing out on a good time to buy a home.” 

During the housing crisis, foreclosures clogged the market and lowered home values, Mr. Blomquist explained. But, recently, the number of foreclosures has been dropping, contributing to the rise in home values.

In January, RealtyTrac recorded 150,000 foreclosure filings, the lowest since April 2007. 

At the height of the housing crisis, about one-third of homes for sale were in foreclosure, Mr. Blomquist said, but last year that average shrunk to about one in five homes.

In previous years, foreclosure sales impacted the entire market, Mr. Blomquist said. “But, these days, foreclosures are a shrinking piece of the pie when it comes to sales.”

Some critics question whether the decline in foreclosures is genuine. They contend that in Maryland, the District, and many other states around the country, foreclosures are artificially low because local governments have instituted policies that make it difficult for banks to take the homes back. 

For instance, it takes more than 1,000 days to foreclose on a home in the District and 531 days in Maryland, according to RealtyTrac. The national average is 414 days.

This means that eventually those delayed foreclosures could come back to haunt the market.

In addition to the shrinking list of foreclosures, Mr. Blomquist explained that the supply of homes for sale is also low because many homeowners with underwater mortgages are waiting for a higher prices before they try to sell their homes.

“Homeowners who are underwater have lost a lot of equity in their homes,” he said. “They’re holding back and not listing their homes for sale. They’d like to see prices go up more before they decide to list their homes.”

Higher prices, he said, could “lure” more formerly underwater sellers into the market. In January, 10.9 million homeowners were underwater, which is down from the 12.5 million who were underwater during the same period in the previous year. Those 1.6 million homeowners who gained back value in their homes may start looking to sell, Mr. Blomquist suggested.

“Those are, potentially, the folks who are going to list their homes for sale,” he said. 

In the CoreLogic study, home prices rose in 48 states — only Delaware and Illinois saw home values decline. 

Arizona saw the biggest price increase, up 20.1 percent from the previous year. Nevada, Idaho, California and Hawaii round out the top five states with price increases. 

Phoenix; Los Angeles; Riverside, Calif.; New York and Atlanta were the cities with the biggest increases.

Locally, the Washington metro area saw an uptick in home values of 7.7 percent from the previous year, the sixth highest increase of any metropolitan market.

 

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