Is the Increase in Housing Prices Real?

Nations Lending customers are located in many areas that are seeing price appreciation, but is the increase in housing prices real, or just a passing trend?

And although people talk a lot about it, it is good occasionally to take a look at the actual housing prices from an unbiased point of view – like Freddie Mac’s. Although we know that these are our clients’ homes, it is still good to know what the market is doing.

Freddie Mac has released the Multi-Indicator Market Index (MiMi) demonstrating that the housing market is continuing to stabilize and is looking to pick up during the spring home buying season. The index tracks the top 100 metro housing markets across the U.S. and of these cities analyzed, 60 percent are showing an improving three-month trend on housing prices.

The national MiMi value stands at 74.7, which translates into an overall weak housing market but the MiMi value has improved 3.53 percent year over year. The all-time MiMi high was in April 2006 when the index ranked at 121.7, and the lowest was in October 2010 at 57.4. The most improving states month over month were Oregon (2.19%), Michigan (1.71%), Florida (1.52%), California (1.35%) and Kentucky (1.19%).

The most improving states year after year were Nevada (11.40%), Colorado (9.60%), Florida (9.14%) and Oregon (8.31%).

Not only that, but Nations Lending lends in areas where the job market is doing well. Employment growth is also contributing to an improved housing market and home buyer interest: in areas where we lend employment has improved and homebuyer affordability is strong, resulting in purchase applications up to almost 20 percent compared to a year earlier. In short, housing prices increase when the local economy permits as well– and this has always been the case.

It is not hard for our veteran Nations Lending loan officers to remember when, just a few years ago, the job market was tenuous and the housing market falling. What a difference a few years makes! But as our experienced loan officers know, too much appreciation is not a good thing either – we need those first time home buyers to get in–regardless of house prices.