In January 2013, national U.S. home prices had their strongest 12-month increase since the summer of 2006, according to the latest data released late-March 2013. With home prices accelerating, potential buyers might be wondering if they’re too late. Is the buyer’s market over?
The S&P/Case-Shiller Home Price Index (HPI)—a leading measure of U.S. home prices—increased a sharp 7.3% for the 10-City Composite, and 8.1% for its 20-City Composite from January 2012–2013. That constituted its largest year-over-year gain in more than six years.
“The two headline composites posted their highest year-over-year increases since summer 2006,” says Chairman of the Index Committee at S&P Dow Jones Indices, David M. Blitzer. “This marks the highest increase since the housing bubble burst.”
But home prices are still far from their peak. Despite the rally in homeowners’ equity, prices are still only around 70% of their June/July 2006 high.
Robert J. Shiller, professor of economics and finance at Yale and the “Shiller” behind the S&P/Case-Shiller HPI, had these prudent words to say about rising home prices in a recent New York Times article: “The bottom line for potential home buyers or sellers is probably this….If you have personal reasons for getting into or out of the housing market, go ahead. Otherwise, don’t stay up worrying about home prices any more than you do about stock prices.”
Home prices have risen in part because historically low interest rates and an improving job market have brought many buyers back into the market. The average rate on the 30-year fixed loan for 2012 was around 3.7% according to Freddie Mac. Borrowers have never seen borrowing rates this low—ever.
So if you want to buy that next home—with rates at an all-time low and prices still about 30% from their peak—it begs the question. Why wait for interest rates to rise and prices to climb?
The Company: Westhill Homes Designated Broker: Zaran Sayre & Associates 30504 Pacific Hwy S, Federal Way WA 98003