It's onward and upward for the residential real estate scene, and just in time for the busy home buying season, it looks like prospective homeowners will be paying a bit more in the coming months, as asking prices continue to grow, a new survey indicates.
Including foreclosed property sales, home prices in February rose by almost 7 percent on a year-over-year basis, according to real estate analytics firm CoreLogic. They also notched higher from January, though only to a smaller degree, up by 1.1 percent.
Prices to cool off next February
Many economists have given intimations that home price growth will slow in the coming months. The report largely agrees with this expectation. The CoreLogic forecast anticipates home prices to increase by roughly 5.2 percent come February 2017 and by about 0.5 percent on a monthly basis.
Frank Nothaft, CoreLogic chief economist, indicated that what home buyers have working in their favor are financing conditions, not to mention the economy, as employers are starting to hire in full force.
"Fixed-rate mortgage rates dropped more than one-quarter of a percentage point in the first three months of 2016," Nothaft explained. "[Additionally], job creation averaged 209,000 over the same period."
He added that these positive developments will provide buyers with the financial backing they need to get through the mortgage approval process. It will also help propel the home buying market this spring, which is typically one of the more active periods of the year for house hunters.
Home prices up in every state
Because real estate values are more of a regional phenomenon, some parts of the country may see prices rise at any given time while in others they slip, due to the market forces regulating supply and demand. That wasn't the case in February, though, as asking values trended higher in all 50 states.
"Home prices continue to rise across the U.S. with every state posting year-over-year gains during the last 12 months," said Anand Nallathambi, vice president and CEO of CoreLogic. "Improved economic conditions and tight inventories continue to drive exceptionally strong gains in many markets, especially for homes priced below $500,000."
Some of the most significant gains in prices were found in the West, due to heavy demand and a diminished inventory. In Colorado, for instance, year-over-year price growth was 10 percent in February, the report detailed. Double-digit gains were also evidenced in Washington at 12.4 percent.
Prices rising too fast or substantially runs the risk of people not being able to afford homeownership, especially when other expenses are taken into consideration, like the down payment and closing costs. Nevertheless, the slowdown in appreciation levels has many expecting 2016 to be a banner year for real estate purchases. In a recent forecast by Freddie Mac, housing could have it's best year in a decade, thanks in large measure to low mortgage rates and more jobs being added to the economy.
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