Our Rapid Rise in Real Estate Prices

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May 22, 2013, 08:05 ET

QUEEN CREEK, Ariz., May 22, 2013 /PRNewswire-iReach/ -- As a typical homebuyer, it is crucial to be well-informed about the current condition of the real estate market in the United States. Being informed about which markets are currently experiencing rises and falls in home prices is a vital factor to be considered when investing in a new home.

Following approximately six years of a struggling housing market, the real estate market is on the rebound and house prices are increasing¹. The first quarter of 2013 marks the first major rise in home prices in the U.S.; this increase in housing prices was the largest rise seen since 2006². As mortgage rates are pushed to record low by the Federal Reserve, an overall rise of 10.2% in housing prices was experienced in the U.S. in the year ending in February 2013³. It should be noted that although some prices have increased by 10-15% from the lows, in many cases those values are still 30-40% below existing peak values¹; that means that the rebound is still in the early stages and more increases are likely expected over the upcoming quarters of 2013.

CoreLogic, a professional real estate data analytics provider, released a Home Price Index Report that outlines appreciating and depreciating real estate markets in the U.S. Within the highlights of their February 2013 report, the five states with the highest home price appreciation were: Nevada (+19.3%), Arizona (+18.6%), California (+15.3%), Hawaii (+14.6%), and Idaho (+13.5%). Conversely, in February 2013, only three states demonstrated home price depreciation: Delaware (-4.4%), Alabama (-1.5%), and Illinois (-1.0%)^4.

As it can be seen, these overall appreciations in home prices bode well for the U.S. housing market since the market is still in the early stages of rebound and prices are expected to continue to climb. In turn, the continued rise in home prices will promote the recovery of the home purchase market and we will continue to see a drop in the foreclosure rates⁴. Recently, job reports in most regions are also showing a rebound in the economy, and we will continue to see appreciation in housing prices as people grow more confident in the economy overall. Additionally, together with the increase in both home prices and sales, we are seeing a rebound in retail sales for furniture and appliances. Consumers who purchase new homes are also purchasing furniture and appliances for these home. In turn, the continued rise in home prices will promote the recovery of the home purchase market⁴.

Leong, Melissa. "No longer foreclosure nation." Financial Post. March 8, 2013. http://business.financialpost.com/2013/03/16/us-housing-foreclosure/ (accessed April 2013, 2013).
Slater, Joanna. "Rising U.S. home prices bode well for recovery ." The Globe and Mail. January 29, 2013. http://www.theglobeandmail.com/report-on-business/economy/housing/rising-us-home-prices-bode-well-for-recovery/article7936829/ (accessed April 14, 2013).
Gittelsohn, John, and Heather Perlberg. "Investors Widen U.S. Rental Search as Home Costs Rise." Bloomberg. April 4, 2013. http://www.bloomberg.com/news/2013-04-04/investors-widen-u-s-rental-search-as-home-costs-rise.html (accessed April 14, 2013).
CoreLogic. "Home Price Index Report." April 3, 2013. http://www.corelogic.com/about-us/researchtrends/home-price-index-report.aspx# (accessed April 14, 2013).