- Mike Ochs
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House Prices Gradually on the Rise Again
Home prices — including distressed sales (foreclosures and short sales), climbed 1.1 percent in April, according to a new report from CoreLogic. If you don’t count distressed sales, prices rose 2.6 percent. Prices have not risen for two consecutive months since June 2010, a time when the homebuyer tax credit was still available.
Although the national gains are welcome, they also reflect a fluctuating state-to-state housing market. Home prices rose significantly in markets where distressed properties comprise the majority of sales, such as Arizona, which saw an 8.8 percent annual gain, and Florida, where prices rose 5.5 percent. This is a result of shrunken foreclosure inventories due to slowdowns in bank processing. States with relatively smaller shares of distressed sales saw prices take a nosedive.
According to Anand Nallathambi, chief executive officer of CoreLogic, “Home prices are responding to a restricted supply that will likely exist for some time to come — an optimistic sign for the future of our industry. We see the consistent month-over-month increases within our Home Price Index (HPI) and Pending HPI as one sign that the housing market is stabilizing. Home prices are responding to a restricted supply that will likely exist for some time to come-an optimistic sign for the future of our industry.”
“Excluding distressed sales, home prices in March and April are improving at a rate not seen since late 2006 and appreciating at a faster rate than during the tax-credit boomlet in 2010,” said Mark Fleming, chief economist for CoreLogic. “Nationally, the supply of homes in current inventory is down to 6.5 months, a level not seen in more than five years, in part driven by the ‘locked in’ position of so many homeowners in negative equity.”
The spring sales season — while not vigorous — was busy, particularly for investors in distressed properties. The summer numbers are not expected to be quite as strong. After two months of gains, asking prices on for-sale homes, a two-month leading indicator, were unchanged in May, according to Trulia.com. “Asking prices and employment both stagnated in May, yet one more reminder that the housing recovery depends on job growth,” said Jed Kolko, Trulia’s chief economist. “The metros where prices rose the most have stronger demand from faster job growth.” As home prices grew, so too did rents. On a national basis, rents rose six percent in May when compared with 2011, according to Trulia, and the increases are accelerating monthly.
Despite the good news on the national front, S&P/Case-Shiller reports that home prices continued to fall in five states. They are Delaware, where prices plunged 11.9 percent when distressed properties are added to the mix; Illinois, one of the nation’s largest housing markets, saw prices fall another 5.6 percent in one year; Alabama, with its large rural and poverty-stricken population, experienced a 6.6 percent decline; Rhode Island, a state where many small communities are in serious financial trouble, reported a 6.2 percent drop; and Georgia, a largely agricultural state with an 8.9 percent unemployment rate, saw house prices fall 5.6 percent.