Home prices continue to improve
According to the June 2013 Trulia Price Monitor, which track asking prices and rents, asking prices rose 1.5 percent compared to May, representing the the largest monthly gain since the crash.
For the fifth consecutive month, Trulia has reported asking prices rising between 1.2 percent and 1.5 percent each month despite rising mortgage interest rates, and report that “prices show no sign of slowdown,” cautiously adding, “yet.”
Could this be the next housing bubble?
Compared to June 2012, prices have risen 10.7 percent and have improved in 99 of the 100 largest metro areas in America with Philadelphia being the outlier, falling 0.01 percent during the same period. In contrast, Las Vegas, Oakland, and Sacramento all saw home prices improve by over 30 percent.
Trulia notes the recovery has spread nationally, even in Chicago and Baltimore where they report prices hit bottom just six months ago, having risen over 7.0 percent annually.
“Rising home prices have swept the country,” said Dr. Jed Kolko, Trulia’s Chief Economist. “Local markets that suffered most during the housing crisis are seeing the biggest price rebounds today. Now even markets that escaped the worst of the bust, like Chicago and Baltimore, are seeing prices climb. However, these runaway price gains won’t last: both rising mortgage rates and slowly growing inventories should start tapping the brakes on home prices, preventing them from rising back into bubble territory.”
Beware: it’s not all sunshine and rainbows
“In the past year, buying a home has become 20 percent more expensive,” said Dr. Kolko. “Roughly half of this higher cost comes from soaring home prices, which are up almost 11 percent in the past year. The other half comes from rising mortgage rates, which have added another 10 percent to the overall cost of homeownership. For young first-time homebuyers who don’t remember life during and before the bubble, these rising costs are a rude awakening.”
Dr. Kolko summarizes the report, “in short: price gains continue to break post-crash records. Prices won’t keep rising this fast: rising mortgage rates, more inventory, and declining investor demand should all tap the brakes on price gains – though just not yet.”