Another month, another sign that the housing market recovery is here to stay.
Home Values Up 3% Annually
Each month, the Federal Housing Finance Agency issues its Home Price Index, a regional and national home value tracker.
In June, home values rose a seasonally-adjusted 0.7 percent from May, marking the 5th straight month that home values have climbed.
The HPI also made its biggest quarterly gain in 7 years in the three months ending June 2012.
The Home Price Index is up 3.0% as compared to last year, led by rising home prices previously hard-hit states such as Arizona, Florida and Michigan.
Between June 2011 and June 2012, the 5 states in which home values rebounded most quickly were :
- Arizona : +12.93% in one year
- Idaho : +8.67% in one year
- Florida : +7.44% in one year
- Michigan : +7.25% in one year
- Arkansas : +7.18% in one year
On a quarterly basis, 5 states posted gains of at least 4 percent in Q2 2012. They were Arizona (+5.95%); Nevada (+4.80%); Maryland (+4.69%); Alaska (+4.55%); and Colorado (+4.04%). California home prices climbed 3.54% last quarter.
The Miami, Florida metropolitan statistical area was the top-gaining MSA nationwide, posting a 8.3% increase last quarter as compared to the first three months of the year.
First-Time Home Buyers Buoy Housing Market
The FHFA’s Home Price Index says that values rose in 43 states in June 2012. In many of these states, including California, Arizona and Florida, multiple-offer situations have become more common.
There are 23% fewer homes for sale nationwide as compared to one year ago and the number of active home buyers is anecdotally higher. The pace at homes are selling is hastening, too.
As a result of falling mortgage rates, today’s home buyers have 7 percent more purchasing power than they did one year ago. First-time buyers are using this newfound purchasing power to escape from rising rents, and to join the ranks of homeowners nationwide.
First-time buyers now account for 1-in-3 home buyers nationwide, with many using low-downpayment programs.
- The FHA offers a 3.5% downpayment mortgage
- The VA offers 100% mortgages for active military and veterans
- The USDA offers 100% mortgages to buyers “of modest means in modest areas”
Even the jumbo mortgage market is making low downpayment programs available. With just 10% down, qualified home buyers can borrow up to $750,000.
Rising Home Prices Put Buyers On The Clock
With the FHFA Home Price Index showing rising home prices in 7 of the last eight months, it’s becoming clear that the housing market’s bottom occurred at some point late in 2011 — likely October.
Going forward, home values should climb and mortgage rates may, too.
If you’re an active home buyer planning to buy late in the year, consider moving up your time frame. The best “deals” may be the ones you get today.