The increase in home price continues to go faster in February. This is according to data report that revealed the biggest gain since the peak of the last real-estate collapse.
According to S&P Case-Shiller index, the home price in 20 major markets of the country gained a 9.3 percent rise over the last 12 months from the 8.1 percent increase in January. It was the biggest year gain since May 2006.
Since 2008, the index revealed a yearly decline in home price. After 2012, however, home values started to rise again with each month’s increase larger than the previous one. According to David Blitzer, chairman of the index committee at the S&P Dow Jones Indices, “despite some recent mixed economic reports for March, housing continues to be one of the brighter spots in the economy.”
Stan Humphries, however, said that home values are “rising at an unsustainable pace.” The pace of the market’s recovery started to slow down in March, he added. The increases, he continued, need not be taken seriously since the index might have been somehow biased over private homes sales instead of foreclosure sales that have been plaguing the market.
Several factors account for the market’s recovery. Some of these include low numbers of foreclosures, low mortgage rates and a slowly thriving job market. These factors help increase sales of new properties as well as old homes.
Recent concern, however, zeroes in on the number of investors flooding the markets, buying homes in order to rent them out. In addition, these investors are outbidding future homeowners. This raises an apprehension of whether the trend can potentially destabilize the market.
An advantage of this increase in home price is obvious; it boosts the economy. New developments and home constructions create jobs. Also, with prices rising, homeowners are more likely to surface from their dismal mortgage situations. This provides homeowners the opportunity to build equity and save money to spend on other purchases.
The biggest increase revealed by the Case-Shiller index comes from Phoenix, where prices rose to 23 percent more than last year. In contrast, New York posted the smallest gain of 1.9 percent.