Home prices increase 13.7 percent from 2012

With November's Case-Shiller Index increase, 2013 could be the best year for home-price gains since 2005.

By MSN Real Estate partner Jan 28, 2014 8:33AM

 © Design Pics/Don Hammond/Getty ImagesBy Phil Izzo, The Wall Street Journal

 

Home prices extended a winning streak in November, with 2013 shaping up as the best year for gains since 2005, according to the S&P/Case-Shiller indexes.

 

The composite 20-city home price index, a key gauge of U.S. home prices, was up 13.7 percent in November from a year earlier. All 20 cities have posted year-over-year gains for 11 straight months.

 

Prices in the 20-city index were 0.1 percent lower than the prior month, but that's mostly due to the weaker winter selling season. Adjusted for seasonal variations, prices were 0.9 percent higher month-over-month. Nine of the 20 cities posted a monthly declines, though on a seasonally adjusted basis priced no city saw a drop.

 

Though home-price gains have been strong, the Case-Shiller data are lagged. Many expect increases to moderate this year.

"The rapid gains in house prices over the past year are the result of low inventories of homes for sale and strengthening home buying activity. But a slowdown in the pace of house price appreciation is in store for 2014," said Paul Diggle at Capital Economics. "We are anticipating a meaningful increase in the supply of homes for sale. The survey evidence suggests that rising prices are motivating more owners to list their homes. And judging by the recovery in housing starts, the inventory of new homes for sale is also set to rise strongly."

Read the full S&P/Case-Shiller release.

 

More from The Wall Street Journal

 
86Comments
Jan 28, 2014 2:11PM
Jan 28, 2014 2:03PM
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Why is it that the vast majority of these homes are in states that are governed by republicans? Why is it that the states that are prospering with much lower unemployment , higher paying jobs, lower inflation, ect. are governed by republicans? 
Jan 28, 2014 1:44PM
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Only in states where there is oil and gas production and republican politicians running cities and states are the houseing prices rising.
Jan 28, 2014 1:40PM
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I can't believe that people are still claiming the housing price appreciation is the result of some kind of government conspiracy. Why can't good news just be good news sometimes?

Jan 28, 2014 1:19PM
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more bullsh$$ in six years my house lost 30,000 dollars because we are the only ones working and all the rest are on welfare or don't speak English with 4 or 5 family's living ion 1 family houses
Jan 28, 2014 1:04PM
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Homes are only worth what a buyer is willing to pay, most folks these days don't have any cash..... So the question might be where is the money coming from? I can only think of government waste..... trillions of $$$$$$$  much of it wasted by Obama and his stoolies on business investments some green some not and some untraceable. Long gone and nothing to show for it...... no jobs, bad economy, debt through the ceiling and a Laughing/Lying  POTUS... Get ready to hear more tonight! Will it ever be stopped?   
Jan 28, 2014 1:02PM
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heyfred300 - I love the way you break it down to reality which MSN failed miserably at with this article.  Foreclosures are still way UP which the banks love because FDIC not only pays full loan value, the Feds allow them thousands in write-offs so they not only get paid by the taxpayer via FDIC, they get paid again by the taxpayers via write-offs.  For my previous (yep) residence, they had tacked on an additional 70,000 in fees and penalties over a 12 month period.  You hit it on the nail with Investors, they cut their deals directly with the bank, cut out realtors and purchase at 70% of the list price.  In fact my nephew, first time buyer, attempted to purchase a home, in short sale, which had 4 offers besides his.  Sent his offer to the bank and 3 days later the bank foreclosed and the home was 'sold' to an investor instead.  The only way out of this mess is to rescind all laws that gutted The Glass-Steagall Banking Act of 1936 which prevented Banks and Wall Street from gambling mortgage derivatives which resulted in this  same catastrophe back in the 1930's.  That brave act was put into place 7 short years after the First Great Depression.  History has been allowed to repeat itself in light of a Congress that supports 'We the Corporation' via organizations such as ALEC and acts such as NAFTA and the TPP.   You can sign the petition by googling Elizabeth Warren and Glass-Steagall and clicking on the petition site.  The only people with anything to lose on this are the 1% and their paid politicians.  Go for it!
Jan 28, 2014 12:51PM
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too many people, not enough good paying jobs (anymore), 2 class of people now high and low, everything is so expensive, ingnition switch on a 2008 silverado installed with 2 new keys $600.00. thats what I need to make everyday to get ahead, get by on $300.00 a day-whow cares.  So if a single guy burns up money like that, how about a family of 5. I am a carpenter and look out, my job is to transfer cash from your accout to mine-never the other way around.

 

Jan 28, 2014 12:47PM
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Good news like this triggers higher mortgage interest rates, as the new "anticipation" that houses will appreciate in value triggers an increase in demand for money relative to the supply of money. Supply & demand theory, in economics, would suggest that the price of money (interest rate and/or closing costs) would increase.


I was reading some of the comments regarding these types of reports being "misleading" to say the least. It is funny that the stock market took quite the tumble the past several trading days and then all the sudden we get a nice housing report today... hmmmm? Damage control maybe? Either way, not much we can do about it except to be skeptical. After the 2008 mortgage crisis, and with the ability to post and share content with just a few clicks around the world, I think there is a much larger proportion of "public awareness" that maybe we all should NOT just assume that homes will appreciate over time. They are actually coming out with insurance products that protect your equity, based on home value indexes by region. One such company is called EquityLock. We insure our homes against hazards by purchasing home insurance, we insure our money in banks through FDIC, our health, etc., so why not insure the equity position in our homes? I am curious to see if these products will sell.


Along with rising interest rates, there is an interesting trend that occurs (which I have noticed as a loan originator). As interest rates rise, a larger proportion of people tend to actually SHOP around for their home mortgage loan, and typically they do this online. People that would normally just get a business card from a real estate agent, a referral from a family member, or just use their depository institution that they have a checking / savings account with tend to get a second opinion as rates rise, especially as the mainstream media covers and new technology enables easy article sharing. Lenders are now checking their pricing against competition more than ever because of this, since more people are going online to shop for their mortgage just to make sure they are getting a fair rate / cost combination. Websites like RateBid and Zillow are nice because they allow borrowers to stay anonymous while lenders compete with each other for the loan scenario. RateBid even let's the borrowers watch the "fight", which is sort of entertaining. With no "winning bidder", it's an efficient way (posting your loan scenario takes about 30 seconds) to really "zero in" on which lenders can handle (possibly a unique loan scenario?) AND which ones can offer the best pricing, all while avoiding all the sales calls from mortgage lenders that typically follow immediately after giving up a phone number online. As a mortgage loan originator, if I get a call for a loan on a property that's in a state which I'm not licensed in OR if their loan scenario appears pretty "tricky", I just send them to RateBid.com where their post will be delivered to an endless supply of lenders. The last person I sent there wanted a 90% Jumbo loan, and I had no idea who would approve such a request (max is usually 85%). I sent them to RateBid and sure enough they got connected with two lenders that could approve scenario so hopefully they will be taken care of! Must be some portfolio lenders still left out there with niche programs after all...

Jan 28, 2014 12:29PM
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As comments show, much of this is cash buyers - the "eval teams" arrive in Atlanta each week, and the buyers follow on Saturday with the cash, buying 5, 6 even a dozen, homes each. Otherwise its a hard sell. As I researched my tax appeal this year, I found the sales are still very slow, prices not up at all for private sellers, but assessed values for taxes were up 15%. If fact, the average sale price, NOT including foreclosures/bank sales, fell well below $70,000 due to the number of sellers in "mature" neighborhoods, who needed to sell nice homes in pretty neighborhoods (i.e. 2000 sqft 3/2 ranch on 3/4 acre landscaped) but were finding no market unless they sold a house assessed at $135,000 for $69,500. In much of the country, there will probably be no improvement, as salaries have fallen so much for those who used to be the first-time buyers.
Jan 28, 2014 12:19PM
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When we had the crash of 2008, it was reported that for the 50 years before the crash, the annual appreciation was 3% a year.

You know what it was leading up to the crash.

Anything over 3% a year means another bubble...for the benefit of the builders, developers, appraisers, real estate agents, mortgage companies, bankers...they are so stupid and so greedy, they are doing it again.

Jan 28, 2014 12:16PM
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The numbers aren't slanted at all.  #1 home ownership is a privelage, not a right; it takes hard work and a consistent financial effort to sustain it.  With that being said, noone ever said your home values would always increase.  It is the economics of supply and demand.  Cost goes up when demand goes up.  Same for building costs and materials. 

Unfortunately we live in a society of "ME ME ME."  Everyone wants something for nothing without having to work for it.  So tired of the bleeding heart liberals who want the government to fix everything.  Fix it yourself..get a job, get a better job, get two jobs, but stop whining and do something about yourself.  The government is incapable of balancing the budget - what makes you think they have the means to support the lower income class?  Obama is a joke - just like every other politician.  They lie to the public, waste our tax money, borrow from social security and medicaid (without repayment) and expect our economy to run smoothly.  TERM LIMITS on the political front. 

Jan 28, 2014 11:56AM
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Great news! Thanks to Obama and shame on G.W.
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And that makes it even more difficult for people who dream of owning their own place one day.

I guarantee you there are more renters than homeowners all over the USA because people just don't meet all the requirements needed to be approved for a mortgage.

Jan 28, 2014 11:52AM
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The media is lying, if builders want to make money, stop raising the prices for lousy material.   Be happy with the little that they do earn.    And the media needs to stop lying.  If they want to tell the world about something, go and investigate the banks and all the fees they are charging.   This country and the people that bank with banks are crazy to pay a fee to get your own money, how crazy is that.    They have second party companies to collect money for them and charge you  a fee, they hired the company, so why should the people pay a fee.    Wake up America and go to hell Banks.
Jan 28, 2014 11:48AM
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Great year for real estate.  But the % are a bit slanted.   If you had a $200000 home and it lost 50% of its value, it is now worth $100000.  If that same home the next year climbs 50% you are not back to even, rather you are at $150000 still down $50000.
Jan 28, 2014 11:44AM
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It is not the housing market that is booming, it is the builders who have seen a little light and have gone back to their old ways, by jacking up the pricies.   They are just like the nasty old greedy bankers.  The materials that buliders put into these houses are not worth what they are charging.   Let them build houses and I pray and hope that they get stuck this time with the whole inventory, maybe this time they will learn a lesson.   Crooks, greed, crooks, greed.

Jan 28, 2014 11:31AM
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The real estate market is in a 2nd bubble...And like the first it will come crashing down...
Jan 28, 2014 11:25AM
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I have a townhouse in the loop of Houston  It has almost doubled in value in three years..great if I want to sell but not so good on my taxes...LOCATION LOCTION LOCATION,,,  In the big cities location is critical. You can ALWAYS change the house, not the location....
Jan 28, 2014 11:15AM
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Unfortunately there are no lies here.  There's a lot of baby boomers with a lot of money who buy all cash, and rich chinese who do the same, hence the prices are going up in major cities.  If you live in the boonies like Kansas or something, then no prices are not going up so much.  But for those that live in actual civilization, yes prices are going up.    But they will drop only IF interest rates spike.   Only then will they drop, and depending, on how much interest rates rise.   If the rates only rise a bit, then no drop at all. 

 

Most of us are priced out of most civilized real estate markets, and thus must move to San Antonio, TX, RIverside, CA or Flint, MI or some other such sucky place like that to afford something decent.

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