Increase in Home Prices Gives Hope to the Housing Market
According to the S&P/Case-Shiller index, home prices showed the largest gain in percentage in more than two years in the third quarter Tuesday.
"It's a sellers market right now meaning the amount of homes that are on the market are not as much as they were a year ago," explained Rafik Ghazarian, a realtor at Keller Williams Realty in Downtown Los Angeles. "We are seeing a lot more activity."
An increase of 3.6 percent from the previous year is more than three times the increase in the earlier quarter. The increase is also the largest rise in prices since the second quarter in 2010.
What's causing this jump in prices? A combination of record low mortgage rates, an improving jobs market, and a drop in foreclosures to a five-year low, reducing the supply of distressed homes available.
"I think this is really good for America's economy, people are a lot more comfortable with what's going on," Ghazarian said. "You're going to see more people who will be more comfortable to put their homes on the market and get a price that validates what they should be getting."
This improvement in housing is speeding up the sales of homes, as well as home building.
Ghazarian noticed more condos and apartments being built in the Downtown L.A. area and credits it to the growing economy.
"Our economy is going to be doing even better in a year to a year and a half by the time the projects are finished being built."
The latest rise in the Case-Shiller index was the second straight improvement and the monthly annual reading has continued to increase for four months in a row.
Home prices are now back where they were in early 2003 before the housing bubble inflated- and then promptly burst. Even with this positive recent gain, the national index is down 28.6 percent from the level that was reached the first quarter of 2006.
Ghazarian said the economy will continue to rise as confidence grows.
"People will be working, willing to buy things and everything will move in a positive direction."