Real Estate Market Commentary - July 2013
by Peter L. Zachary, MAI, MRICS
Good news on July. On July 31, 2013 the New York Times had an article on the 6th
page of the Business section entitled, “Home Prices Jumped 12.2% in May”. The page
number of this article in the New York Times shows you how important the housing
market has become. It stated, “Home prices jumped 12.2 percent in May compared with
a year earlier, the biggest annual gain since March 2006. The increase shows the
housing recovery is strengthening.
The Standard & Poor’s/Case-Shiller 20-city home price index released on
Tuesday also surged 2.4 percent in May from April. The month-over-month gain nearly
matched the 2.6 percent increase in April from March – the highest on record.
The price increases were wide-spread. All 20 cities showed gains in May from
April and compared with a year earlier.
Prices in Dallas and Denver reached the highest level on records dating to 2000.
That is the first time since the housing bust that any city has reached a record high.
Home values are rising as more people are bidding on a relatively tight supply of
houses for sale. One concern is that rising mortgage rates could slow home sales. But
many economists say rates remain low by historical standards and would need to rise
much faster to halt the momentum.
Svenja Gudell, senior economist at Zillow, a home price data provider, said a big
reason for the recent price gains was that foreclosed homes made up a smaller
proportion of overall sales. Foreclosed homes are usually sold by banks at low prices.
‘Typical home values have appreciated at roughly half this pace for the past
several months, which is still very robust,’ Ms. Gudell said.
Ms. Gudell said higher mortgage rates and a probable increase in the number of
homes for sale in the coming months should slow the pace of price gains and stabilize
the housing market.
The S.& P./Case-Shiller index covers about half of American homes. It measures
prices compared with those in January 2000 and creates a three-month moving
average. The May figures are the latest available.
Despite the recent gains, home prices for much of the country are still about 25
percent below the peaks they reached in July 2006. That is a major reason the supply of
homes for sale remains low, as many homeowners are waiting to recoup their losses
before putting their houses on the market.”
Do you feel rich?
More to come next month. Read previous Real Estate & Housing Market News.
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