US home prices rise 10.9 pct., most since 2006

[Zorro]

Source: AP

U.S. home prices jumped 10.9 percent in March compared with a year ago, the most since April 2006. A growing number of buyers are bidding on a tight supply of homes, driving prices higher and helping the housing market recover.

The Standard & Poor's/Case-Shiller home price index released Tuesday also showed that all 20 cities measured by the report posted annual gains for the third straight month.

And prices rose in 15 cities in March from February. That's up from only 11 in the previous month. The monthly figures aren't seasonally adjusted and may reflect the beginning of the spring buying season.

Annual prices rose in Phoenix by 22.5 percent, the biggest gain among cities. It was followed by San Francisco (22.2 percent) and Las Vegas (20.6 percent).

Read more: http://finance.yahoo.com/news/us-home-prices-rise-10-130515054.html

[enlightenment]

1. Investors and speculators.

Mostly.

Lower priced homes that would be within the reach of the average person are being over-bid with cash offers by speculators - at least in Las Vegas. A friend recently spent months chasing down a small home; she was super picky, but didn't have a lot of cash lying around. She bid - and lost at the last minute - on at least four homes and eventually managed to snag something she really doesn't like as well, for twice what she wanted to pay (and the home isn't worth the price). This is in an area with a glut of empty homes; many are repos, and her story is just one among many.

The banks want a profit and they don't care how they get it. It's nice that there are people willing to overbid, but they are doing it to turn a profit, not to have a place to live. This is what started the boom cycle in LV a decade ago, and it's starting to look like housing bubble 2.0.

[bhikkhu]

2. 65% of households in the US still are home owners

so the good news there is that this is "asset value" in hand. Even if its not actual cash, it represents flexibility, opportunity, and better economic health for the majority. It impacts a huge swath of the population, across a broad spectrum of incomes.

[customerserviceguy]

3. When mortgage rates rise (and they inevitably will)

this, too shall pass. Even going from 4% to 5% would be a 25% increase in interest rates, and would drive down the ability to borrow enough money to keep pumping home prices up.

[PSPS]

5. Actually, higher mortgage interest rates would make a better real estate market

When mortgage rates are low, there is less room to bargain over price.

[customerserviceguy]

7. Better for buyers, maybe

Not better for sellers. Even buyers may find things tougher when rates go up, as sellers cannot go below what is owed on the place, plus closing costs.

[PSPS]

9. No, better for both.

The more a mortgage payment (or potential mortgage payment) consists of principal, the less room there is for bargaining.

[Safetykitten]

4. And right on time our Fed at work reinflating another bubble.

[PSPS]

6. You've got it. This isn't good news at all.

The media is trying to imply this is good news but it is actually horrible news. Why? Because this rise in values isn't matched by a rise in incomes. In other words, this is a "leading indicator of bubble." We're getting back to NINJA nonsense again.

[jakeXT]

8. daily ticker video

http://finance.yahoo.com/blogs/daily-ticker/largest-gains-home-prices-7-years-forget-bubble-144654731.html#more-id