Home Price Increases Have Been Robust, And Will Likely Stay That Way

Posted by Orb Staff on May 16, 2013 No Comments
Categories : Residential Mortgage

CoreLogic has released a new analysis of home price trends that finds prices increased by 7.3% in 2012, the strongest rate of appreciation in nearly seven years. The data draws from the CoreLogic Case-Shiller Indexes, which cover more than 380 U.S. markets.

The analysis also projected that the trend of rising home prices will continue in 2013 and beyond. In the five-year period from the fourth quarter of 2012 to the fourth quarter of 2017, home prices are expected to rise at an annualized rate of 3.9%, the company says.

‘Home prices were up in seven out of every 10 metro areas in 2012. By comparison, in 2011, prices appreciated in fewer than one in five markets,’ says Dr. David Stiff, chief economist for CoreLogic Case-Shiller. ‘We expect strong buying activity this spring will lead to stabilization of home prices in most lagging markets, resulting in rising home prices in nearly every metro area by the end of 2013.’

The largest year-over-year price gains were recorded in many of the metro areas that were at the epicenter of the housing bubble/crash, including Phoenix (24%), Miami (14%) and Las Vegas (13%). In addition, price declines moderated in metro areas with lagging recoveries, such as Long Island, N.Y. (-4%), Virginia Beach, Va., (-2%) and Philadelphia (-1%).

The data point to continuing price appreciation, but the overall national rate of home price increases in 2013 is projected to decelerate from 2012 levels. The CoreLogic Case-Shiller Indexes project a 2.5% home price increase in 2013, as the market dynamic shifts again in bubble/crash metro areas.

While homes in these markets are still significantly undervalued, the strong investor demand for foreclosed properties, record levels of housing affordability and other demand factors that have driven recent double-digit price gains are unlikely to persist throughout the year. In addition, as prices rebound, more existing homes will be listed for sale, particularly those of homeowners who had negative equity prior to the recent price jump. Price appreciation will also be limited by the increase in supply as more new homes are built.

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