The housing market recovery is showing signs of getting stronger, as many markets nationwide have had significant home price gains in the last year or so. That trend is expected to continue through the end of this year.
The national average home price is expected to increase some 2.5 percent between the end of 2012 and the end of 2013, led by bigger improvements in a number of major metropolitan areas across the country, according to new data from the real estate tracking firm CoreLogic.
The area with the largest forecasted growth through the end of the year was San Francisco, which has already seen considerable gains. On an annual basis, prices there increased 13 percent over the course of 2012, but that trend is likely to be far lower in 2013, with growth projected to come in at 6.3 percent. Not far behind, however, was Tucson, where prices rose 12.5 percent last year and will rise just 6.1 percent in 2013.
Salt Lake City (5.7 percent), Hartford (4.5 percent) and Tampa (3.9 percent) rounded out the top five for projected growth, the report said. Baltimore and Philadelphia, at 3.4 and 2.7 percent, respectively, also came in above the anticipated national average, and New Orleans equaled it.
However, an expert with the firm says that fears from some corners of the industry that these increases will lead to another housing bubble are generally the result of over-concern, as the gains are not expected to be so sizable that this could become an issue any time soon, if at all.
“Even if double-digit price appreciation were to continue in the former bubble metro areas, there is no reason to believe that new home price bubbles are forming,” said CoreLogic chief economist David Stiff. “That’s because single-family homes in these markets are still very affordable, even after last year’s large price gains. Consider Phoenix, where home prices rose 27 percent since the market hit bottom in 2011, making it the strongest residential real estate market in the U.S. Yet, home prices there are still 45 percent below their 2006 peak.”
In general, housing experts believe that the home price gains seen recently will continue — however, in a less robust way — at least through the end of next year, depending upon how long Federal Reserve bond-buying efforts depress interest rates and increase affordability.