Another Housing Report Shows Big Price Increases Year over Year

Another housing report released showed big price increases year over year, adding more credence to the housing recovery that is in full swing, thanks to low home prices and low mortgage rates. Corelogic, the real estate data and analytics firm, released their January 2013 Home Price Index (HPI) Report, which showed housing prices increased 9.7 percent in January 2013 compared to January 2012.

Another Housing Report Shows Big Price Increases Year over YearCorelogic's HPI report is one of many released over the past year that shows stronger home sales, higher home prices, and a lower amount of homes in inventory for sale - all a net positive for housing. With the highest home affordability in a generation and the lowest mortgage rates in over 40 years, now is a good time to buy a home. Mortgage rates today on 30 year conforming loans can be found as low as 3.00 percent if you're willing to pay points on a loan.

Home prices month over month were also higher in the HPI report. On a month-over-month basis, home prices increased by 0.7 percent in January 2013 compared to December 2012. This number also includes including distressed sales, which is telling since distressed sales, short sales, and foreclosures usually sell for less than prevailing market prices.

An increase in home prices was seen across the United States with the exception of two states, Delaware and Illinois. I'd imagine those states will see higher home prices as well in 2013 since current mortgage rates are still just above record lows.

In another recent housing report, home loan demand surged into the double digits week over week. In the Mortgage Bankers Association's most recent Weekly Application Survey, mortgage applications increased 14.8 percent from one week earlier. Loan demand was driven higher for both home purchases and refinancing as mortgage rates fell.

The MBA's Purchase Indexed and Refinance Index both increased 15 percent from the previous week. The Refinance Index is now at the highest level since mid-January and the Purchase Index is at the highest level since the beginning of February. The average contract rate on conforming mortgages, jumbo mortgages, and FHA mortgages all fell in this week's survey.

If you're sitting on the sidelines deciding when to buy a home, now is the best time. Since both home prices and mortgage rates will be moving higher in the coming years, you won't get better deals by waiting. You can get the most "bang for your buck" and afford the most home right now. as both prices and rates move higher your home purchasing power diminishes.

For each percent higher rate you pay on a loan, the monthly mortgage payments move higher. For example, a $400,000 home loan at 3.00 percent over 30 years will cost $1686.42 a month (without taxes and insurance). The same loan amount for 30 years at 4.00 percent will cost $1909.66 a month, a $233.42 monthly difference.

As you can see, you can quickly get priced out of a market or your dream home if you wait to buy. Therefore, now is probably going to be the best time to buy. The same holds true if you're thinking about refinancing your current loan. Look at the example above, if your current loan rate is 4.00 percent and you refinance to a rate of 3.00 percent you'll save $233 a month on a $400,000 loan.
Author: Brian McKay
March 7th, 2013