Real Estate Prices Rise by 12.9% in a Year

By Allison Halliday | May 2, 2014

According to the latest Standard & Poor/Case Shiller Home Price Index, seasonally adjusted prices increased by 0.8% in February. These figures were better than forecast as economists had predicted an increase of 0.7%.

Throughout the nation prices have increased by 12.9% year on year, figures that would seem to indicate the property market is recovering nicely. However a closer examination reveals a slightly different picture, as home prices in the US were virtually unchanged in February, having decreased by 0.1% every month since last November. Even though prices increased by 12.9% year on year, figures showed this growth is slowing down as the numbers were 13.2% in January, and reached a peak of 13.7% in November. The figures for February were slightly lower than anticipated, as it had been predicted price increases would reach 13%.

The article in RISMedia points out that even though prices are continuing to increase, other housing statistics are still weak. The number of new housing starts initially recovered but is now beginning to falter, and nationally home prices are not yet back to figures seen in 2005. However generally the figures are positive, and even though the housing market is showing signs of slowing down, this was expected as things gradually return to normal. Mortgage rates are gradually increasing, and the market between buyers and sellers is becoming more balanced.

Experts point out that home ownership is still a good deal for those who can afford it and who are able to find a suitable property. The latest Zillow report has found buying a home is better than renting in half of US metros, provided the buyers intend staying in their homes for at least two years. The report takes into account the costs associated with buying and renting.

Zillow surveyed the 35 largest metro areas, analyzing them for the break-even point. It found properties in Orlando broke even within just a year, in Tampa this figure was 1.1 years, and in Riverside it takes less than a year. Other major areas have much longer break even points, with Washington DC scoring 4.2 years, while in Boston it would take four years, and in Phoenix it would take 3.3 years. Rents are continuing to rise, and while mortgage rates are still low this does make buying a home more attractive for those who are able. However some markets are becoming less affordable and this situation is expected to worsen as mortgage rates increase.