With favorable housing prices and interest rates at historic lows, it makes sense that more and more people are looking once again to purchase real estate - either for their primary residence or as an investment. At the same time, any of these potential buyers will tell you that there has been an utter dearth of inventory in Los Angeles for a quite a while now. Combine these two factors and the inevitable effect is going to be an upward pressure on the price of homes. And that's what folks are seeing as one home for sale after another brings in multiple offers and sells above the asking price. Many clients have asked me: "Is it just L.A. or is this going on in other parts of the country? Indeed, it is going on in many other parts of the country (even in Canada). And here are some stats and a chart that illustrate this trend in the market today.
Standard & Poor’s / Case-Shiller Home Price Indices are leading measures for US residential housing market, tracking changes in the value of residential real estate both nationally as well as in 20 metropolitan regions. In their latest press release, the S&P/Case-Shiller report presented data through June 2012. Significant in this report was that all three headline composites ended the second quarter with annual growth rates that were positive for the first time since the summer of 2010. All 20 cities studied by S&P Dow Jones reported positive price gains for the second consecutive month in a row.
Many analysts are forthright in their assessment of the numbers. "This is a clear sign we've turned around," said David Blitzer, managing director and chairman of Standard & Poor's Index Committee in an interview on CNBC. “We seem to be witnessing exactly what we needed for a sustained recovery; monthly increases coupled with improving annual rates of change. The market may have finally turned around."
The national composite for U.S. home prices rose 1.2% from last year in the second quarter and grew 6.9% from the first quarter of 2012. Leading the charge was Detroit, which saw a whopping 6% increase, while prices in Los Angeles moved up 1.7%. So how are prices today compared to, say, 1, 5, or 10 years ago? This chart from the report shows that, nationally, prices are back to where they were in 2003.
chart courtesy of standardandpoors.com