Housing Market 2012 Latest: Home Prices Increasing

Search through a Google news feed for "housing market" and you'll see all kinds of articles on how the market is faring for 2012. Home prices up, interest rates down, new construction up, sales are up...but then there's the flip side of the news. Some articles say hitting bottom and improving a bit is "far from a housing market recovery." So, which is it?

Some of the decision is yours. You can make numbers "say anything." If a 3% increase in home prices over last year is disappointing to you, then we're certainly a long ways out from a full blown recovery. But if you look at the last 4 years of solid loss and see the gain in 2012 as a good thing, then you may be ready to claim recovery.

So let's look at one of the factors in the housing market recovery debate: home prices. Prices are important because they show value of real estate, and that's a vital aspect to the market. If homeowners are losing value every year, then new potential buyers (renters) won't want to buy into the housing market. This decreases demand, further hurting prices. It's a cycle of depression in the market.

As prices go up, buyers are more willing to buy because the costs are still near the rock-bottom level we're used to over the last few years. Plus, the price increase shows an investment opportunity. It's a good way to take advantage of the current housing crisis.

According to mortgage investor Fannie Mae, home prices are finally on the rise nationally: 

After declining by an estimated 23.6% from their peak in the third quarter of 2006 to the first quarter of 2012, we estimate that home prices on a national basis increased by 3.2% in the second quarter of 2012. Although we believe home prices may decline again through early 2013, we expect that, if current market trends continue, home prices will not decline on a national basis below their first quarter 2012 levels. Our estimates of home price changes are calculated differently from the S&P/Case-Shiller U.S. National Home Price Index and therefore result in different percentages for comparable changes. Our estimated 23.6% peak-to-trough decline in home prices on a national basis corresponds to a 35.1% decline according to the S&P/Case-Shiller's National Home Price Index.

So what does this look like over the last decade? Here's a graph showing what you just read (click to enlarge the picture):

You can see 4 years ago we had a 9% decrease in home values over the previous year. While we wouldn't want to see a huge jump in prices (which would likely indicate a bubble happening), it's good to see the almost-3% increase this year.

Here's a look at the decline of home prices since their peak 6 years ago (click the picture to enlarge it).

So the question remains, is this the housing market you should buy into as a potential home buyer? With home prices on the rise slightly and interest rates so low, signs point to yes. Buying a home isn't for everyone, and it's not a quick snap of the fingers. Be prepared for some hard work and patience. Credit scores and assets are important in the home buying process. In fact, mortgage pre-approval should be your first step so you know where you stand with your financial portfolio, and just how much of a house payment you can realistically afford.

Get details on the mortgage loan options in today's housing market with our free eBook, "The Only Mortgage Loan Options Guide You Need." Click the button below to download your free copy today. Once you're comfortable with your options, consider talking to a mortgage consultant about mortgage pre-approval.

(source: Fannie Mae)

(creative commons photo credit)