Carpe Diem

Home prices surged 9.7% in January, the highest annual increase in almost 7 years as housing recovery strengthens

coreCoreLogic reported  today that its repeat-sales Home Price Index (HPI), based on sale prices for the same homes over time, posted a 9.7% year-over-year gain in January (including distressed sales), which was the largest annual increase in home prices nationwide in almost seven years, going back to April 2006 (see chart above).  The January gain was the eleventh consecutive monthly increase in national home prices on a year-over-year basis starting in March of last year. The last time there were 11 back-to-back monthly increases in year-over-year home prices was in 2006.  Excluding distressed sales, CoreLogic reported that national home prices increased annually by 9.0% in January.

At the state level, there were six states that experienced double-digit gains in January home prices (including distressed sales): Arizona (20.1%), Nevada (17.4%), Idaho (14.9%), California (14.1%), Hawaii (10.7%), and Utah (10.1%).

Looking forward one month, the CoreLogic Pending Home Price Index predicts that home prices in February will match January’s gain with another 9.7% increase in the HPI on an annual basis.

Comments from CoreLogic:

Mark Fleming, chief economist for CoreLogic: “The HPI showed strong growth during the typically slow winter season. With these gains the housing market is poised to enter the spring selling season on sound footing. The improvements are materializing across the country, with all but Delaware and Illinois showing increasing HPI and 15 states within 10 percent of their peak values.”

Anand Nallathambi, president and CEO of CoreLogic. “Home prices continued to gather steam across a broad swath of the country in January, continuing the positive trend we saw during most of 2012. Many states across the western U.S. and along the East Coast saw average price gains of more than 6 percent, which is likely to boost home sale activity into the first half of 2013.”

11 thoughts on “Home prices surged 9.7% in January, the highest annual increase in almost 7 years as housing recovery strengthens

  1. “Much of the country is now a seller’s market, the Realtors group says, just one year into a potential housing recovery following the worst downturn since the Great Depression.

    The shortage of sellers, a force behind higher prices, is expected to ease as prices rise, economists say.

    But a return to healthy inventory levels could take years. Many homeowners can’t afford to sell because they don’t have enough equity to put into buying another house — or would have to write a check to sell. The supply of distressed houses for sale is thinning as the foreclosure crisis recedes, especially in some states. Home building, while improving, is still at low levels. And, after years of holding on, few homeowners want to sell when prices are just coming off the bottom, Realtors say.

    “We’re making a painful transition from a market dominated by distressed sellers to a market in which the only people selling are people who want to sell,” says Glenn Kelman, CEO of online brokerage Redfin.” — USA Today

  2. This is truly great news. Now we can get back to propelling our consumer economy forward, like we did before. And if wages remain stagnant, we can go back to innovative ways to extract equity from our homes. This will certainly provide an opportunity for the free enterprise system to grow new businesses for such service. And let’s (Mark: notice the grammar) keep Government out of this so we don’t make the same mistakes as before.

    • “A Bizarro World of home finance is being created by Dodd-Frank Wall Street Reform and Consumer Protection Act’s new enforcement agency, the Consumer Financial Protection Bureau (CFPB). In this world a loan with little or no money down, a FICO credit score of 580, and a total debt-to-income-ratio of over 50% is defined as a prime loan, even though it has a nearly 30% likelihood of ending in foreclosure. Like the bond salesman in Bizarro World, this sets up for failure working-class families striving to achieve the American dream. In the real world a prime loan with 20 percent down, a FICO score of 720 (the average score of all individuals in the U.S.), and a 40% debt ratio has a 1.5 percent chance of foreclosure. …

      In Bizarro World the government does not price for risk; instead credit is allocated by government agencies based on political goals. Here, the Federal Housing Administration (FHA) charges the same to insure a loan with 5% down, a FICO credit score of 580, and a total debt-to-income-ratio of 55% as for a loan with 20% down, a FICO credit score of 740, and a total debt-to-income-ratio of 30%.” — AEI

      Meet the new Democrat housing bubble, starting to look a lot like the old Democrat housing bubble.

  3. “Using September data from DQNews, investors bought 28% of all transactions in Southern California, 38% in Phoenix and 48% in Las Vegas. Based on anecdotal evidence, investors are even more active today than back in September. Not only are they buying, they are paying cash.” — Seeking Alpha

    A little dated, but still relevant?

    • Yes, in S. Calif we are in the 25% to 33% range for investors (they don’t occupy the home). And in that percentage is a small percentage of the big money — national investor groups like hedge funds, investor pools — I think they are buying small (1-4) rental units as well as SFR homes.

      • Yep, the change of society preferring to rent instead of purchase, is an opportunity for investors looking for cash flow.

        • Prefer to rent? Or forced to rent? I don’t think it is much of a choice. A lot of people who lost a home cannot qualify for the low interest mortgages/loans. And there are many others in the same situation. Some homeowners cannot even qualify by today’s standards to refi to take advantage of the low rates. So this is not a true economic preference. But there is definitely an investment opportunity there. Let’s see what develops.

          • Rents minus mortgage payments, management, and maintenance in the San Fernando Valley return about 4% annually on investment currently. Where else can you get that rate of return with as little risk right now?

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>