Home Prices Still Soaring

NEW YORK (CNNMoney)

Home prices are still surging, but the pace of the gains has steadied as interest rates continue to rise.

Prices for homes in the nation's 20 largest cities in June rose 12.1% over the last year, according to a report Tuesday from S&P/Case-Shiller home price index.

While that gain is still robust, it didn't quite match the gain of 12.2% reported for May. Rising mortgage rates may be to blame.

"With interest rates rising to almost 4.6%, home buyers may be discouraged and sharp increases may be dampened," David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a press release.

Home prices have been on a tear for the last twelve months. June marks the first time in over a year that the overall increase has been smaller than the month before. While prices rose in all 20 cities measured by the index, only six cities in June saw price increases larger than the month before, down from 10 cities in May.

Prices in Dallas and Denver hit all-time highs, while San Francisco housing prices notched the biggest rebound, rising 47% from their low in March 2009.

U.S. home prices are now at early 2004 levels -- still 23% below their peak in mid-2006.

And while mortgage rates have been steadily rising for the last few months, they're still at historically low levels.

Record-low rates, a lack of new homes on the market and years of pent up demand have been the driving forces behind the recent home price spike, according to Erik Johnson, senior U.S. economist at IHS Global Insight.

"The shortages are likely to get larger before getting smaller," Johnson wrote in a note Tuesday. "We still expect housing to remain a key driver of growth for at least the next couple of years."

Related: How the Fed can taper without killing housing

The recovering housing market has been a big part of the nation's economic recovery since the Great Recession. But many fear that rising mortgage rates could put a damper on that growth.

Rates have risen more than a full percentage point since May, when Federal Reserve Chairman Ben Bernanke indicated the Fed may soon ease its bond buying program that's helped keep interest rates at record lows.

While some cheer the Fed stepping back from its unusual bond purchases amid fears the buying will spark inflation, others worry that it may be too soon.

First Published: August 27, 2013: 9:19 AM ET

Home Prices Keep Soaring

A new report on CNN money today, July 30, 2013, confirms what I and my fellow realtors have been saying for a year now: The housing market is coming back very strong, with prices increasing every month for the past 12 months. Some cities are now seeing prices as high or higher than before the "bubble" of 2007.

Prices in the Chicago area are definitely up, as they are nationwide. If you've been waiting to sell your home, now may be the time. If you'd like to see what your home is worth today, I'll be happy to run some comps for you. Call me at 630-697-4500. Adam

Read what CNN has to say:

Home Prices Keep Soaring

By Chris Isidore @CNNMoney July 30, 2013: 9:28 AM ET

NEW YORK (CNNMoney)

Home prices continued to gain steam in May according to a closely-watched reading, even as mortgage rates climbed.

The S&P/Case-Shiller home price index was up 12.2% compared to a year ago, slightly better than the 12.1% rise in April. It was the biggest year-over-year jump in prices since March 2006, near the peak of the housing bubble.

Just a year ago, the index showed a 12-month decline in prices. But they have increased every month since June 2012, and each month the increase has been greater than the month before.

Home values have been rising due to a combination of factors, including a drop in foreclosures that had been putting downward pressure on prices, and a tight supply of houses available for sale. But the record low mortgage rates of earlier this year have risen significantly since then, crimping the purchasing power of potential home buyers.

Still, at least in this May reading, the mortgage rates have not slowed the rapid increase in prices.

Related: 5 things to know about rising mortgage rates

"Home prices continue to strengthen," says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. All 20 markets measured in the index have higher prices than they did in April. And two cities - Dallas and Denver -- now have prices that are even higher than they were at the height of the bubble.

Home recovery spurs renovation boom

Many of the markets with the biggest year-over-year changes in prices are those that were hit hardest by the collapse of housing. Prices in San Francisco, Las Vegas, Phoenix and Atlanta are all up more than 20% from a year ago. New York had the most modest rise with a 3.3% increase.

But the rapid price gains over the last year are at a level that no expert thinks can be sustained. Some had even suggested it was unhealthy for the market, raising the risk of a new housing bubble, at least in some regions. The rapid rise of housing prices in the middle of the decade eventually sparked the crisis in the financial markets and the Great Recession.

Just a year ago, the index showed a 12-month decline in prices. But they have increased every month since June 2012, and each month the increase has been greater than the month before.

Home values have been rising due to a combination of factors, including a drop in foreclosures that had been putting downward pressure on prices, and a tight supply of houses available for sale. But the record low mortgage rates of earlier this year have risen significantly since then, crimping the purchasing power of potential home buyers.

Still, at least in this May reading, the mortgage rates have not slowed the rapid increase in prices.

Related: 5 things to know about rising mortgage rates

"Home prices continue to strengthen," says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. All 20 markets measured in the index have higher prices than they did in April. And two cities - Dallas and Denver -- now have prices that are even higher than they were at the height of the bubble.

Home recovery spurs renovation boom

Many of the markets with the biggest year-over-year changes in prices are those that were hit hardest by the collapse of housing. Prices in San Francisco, Las Vegas, Phoenix and Atlanta are all up more than 20% from a year ago. New York had the most modest rise with a 3.3% increase.

But the rapid price gains over the last year are at a level that no expert thinks can be sustained. Some had even suggested it was unhealthy for the market, raising the risk of a new housing bubble, at least in some regions. The rapid rise of housing prices in the middle of the decade eventually sparked the crisis in the financial markets and the Great Recession.

June Home Sales: Woodridge Experiences Slight Increase in Prices, Sales

Posted in the Woodridge Patch by Mary Ann Lopez (Editor), July 16, 2013

Year-over-year, sales and prices increased slightly in Woodridge, while sales in DuPage County are up about 17 percent, according to the Mainstreet Organization of Realtors.

The 28 single, detached homes sold in Woodridge during June 2013 represented a 7.7 percent increase over June 2012, when 26 homes were sold, according to the Mainstreet Organization of Realtors (MORe). There were 30 homes sold in Woodridge during May.

As the number of homes sold increased slightly in Woodridge, the median home price also experienced some growth. The median price increased 4.3 percent to $242,500 from $232,500 in June 2012, according to the statistics.

Sales of single-family, detached homes in suburban Chicago increased 17.1 percent in June 2013 compared with the same period a year ago, MORe reported. Sales in the 200 communities MORe gathers information on in DuPage, Lake and suburban Cook counties – experienced notable sales gains last month.

Sales momentum is expected to continue in those communities, as the number of detached homes under contract in June grew by 36.5 percent in those same communities, according to MORe. The median sale price for detached homes also increased 9.5 percent from the previous June, and according to MORe this marks the fourth month in a row of year-over-year price growth.

In DuPage County, Clarendon Hills experienced the most significant increase in sales over the same period last year. Several Patch communities in DuPage County experienced a decline in the median sales price during June, but Downers Grove saw the largest decrease in price. Sales prices dropped -13.7 percent with sales prices declining from $355,000 in June 2012 to $306,500 in June 2013, according to the statistics.

Darien experienced the most significant decline in the number of homes sold, dropping -18.2 percent from June 2012.

Buyers should look to act soon if they are interested in buying so they lock in today’s low interest rates, said Tonya Corder, president of MORe and managing broker of Keller Williams Preferred Realty in Orland Park.

“A slow and steady growth in home prices, combined with more properties coming on the market, is creating ideal conditions for both buyers and sellers,” she said.

May Home Sales: Woodridge Experiences Major Sales Growth, Prices Rise Steadily

from the Woodridge Patch - June 18, 2013

Woodridge experienced significant growth in home sales during May, while prices showed steady increases, according to the Mainstreet Organization of Realtors.

The 30 single, detached homes sold in Woodridge during May 2013 represented a 87.5 percent increase over May 2012, when 16 homes were sold, according to the Mainstreet Organization of Realtors (MORe).

There were 32 homes sold in Woodridge during April.

While the number of homes sold increasing significantly in Woodridge, the median home price also showed steady gains in May. The median price increased 13.4 percent to $241,000 from $212,500 in May 2012.

Sales of single-family, detached homes in suburban Chicago increased 29.1 percent in May 2013 compared with the same period a year ago, MORe reported. Sales in the 200 communities MORe gathers information on in DuPage, Lake and suburban Cook counties – experienced notable sales gains last month.

Sales momentum is expected to continue in those communities, as the number of detached homes under contract in May grew by 45 percent in those same communities, according to MORe.

In DuPage County, Burr Ridge experienced a significant increase in sales over the same period last year. In May, 17 homes sold compared with 6 in 2012.

The only Patch community in DuPage County to experience a slight decrease in sales during May was Hinsdale, which had -33.3 percent sales declining from 33 homes sold in May 2012 to 22 homes sold in May 2013, according to the statistics.

Competition in the housing market is going to continue as the market works through a backlog of distressed properties, said Tonya Corder, president of MORe and managing broker of Keller Williams Preferred Realty in Orland Park.

“Buyers need to come in aggressively with their first price, especially on moderately priced homes in good condition,” Corder said “We are seeing multiple offers and people writing contracts on properties the day they come onto the market. ... There is a buzz going on in real estate right now. People want to take advantage of this market.”

Homebuyers clueless about mortgages

By Les Christie @CNNMoney May 9, 2013: 12:24 AM ET
The housing market is heating up, yet many house hunters are not prepared to take on the biggest purchases of their lives. When it comes to mortgages, homebuyers answered basic questions about terms, how to choose a lender and financing wrong nearly one-third of the time, according to an April survey of more than 1,000 current and prospective homeowners by real estate website Zillow.

Among the survey's findings, 31% of buyers don't think it's possible to get a mortgage for less than 5% down; 34% don't know what the term "annual percentage rate" (APR) means and one in four believe you must close with the lender that pre-approves your mortgage.

Related: Tips for buying a home

"All too often buyers focus on negotiating a lower home price and ignore the importance of finding the right loan," said Erin Lantz, director of mortgages for Zillow. "Buyers should always shop multiple lenders and compare rates and fees and read lender reviews in order to find the best loan for their situation."
One example: 34% of respondents believe lenders are required by law to charge the same fees to all clients for credit reports, appraisals and the like. That's wrong. Fees vary from bank to bank and can often be negotiated.

Related: 5 best markets to buy a home

But it's hard to compare those deals if you don't understand what mortgage terms, like "annual percentage rate," mean. The APR factors into fees, upfront points, origination and underwriting fees and other costs that borrowers use to compare the actual cost of loans.
Such knowledge gaps can have long-term consequences. About 34% of first-time homebuyers think they need a down payment of at least 5% to make a home purchase, but loans insured by the Federal Housing Administration can require as little as 3.5% down.

Related: How much house can you afford?

And 24% of buyers believe the best mortgage deals are available through the banks where they currently have their savings and checking accounts, but often competing lenders can undercut those banks by large margins."If a homebuyer can lower their interest rate by even half a percentage point, they can not only increase their purchasing power, but save thousands of dollars over the life of the loan," said Lantz.

For every $100,000 borrowed, a half percentage point lower rate would reduce payments by $28 a month on a 30-year, fixed rate loan. That adds up to more than $10,000 over 30 years. Or borrowers could choose to add that $28 savings to each monthly payment. That would shorten the term of the mortgage from 30 years to just over 27 and save $6,500 in interest paid.

Related: Was my home a good investment?

Another costly mistake: Many house hunters go shopping with financing in place because it enables them to act more quickly if they see a home they want. But 26% of buyers believe that once they're pre-approved, they're obligated to close the deal with those loans, according to the survey. In reality, there's no obligation. If buyers see better terms available they should take them.

Existing homeowners can also be guilty of ignorance. Some 20% of homeowners surveyed didn't know that underwater mortgages -- those in which borrowers owe more than their homes are worth -- can be refinanced into lower rate loans.

Related: Boomerang buyers return to market after foreclosure

Finally, the survey found that nearly a third of homeowners are unaware that if they go through a foreclosure or short sale, they may not have to wait the full seven years it takes for their credit score to recover and they can buy a home again. In reality, some homeowners who do short sales can obtain financing to buy another home in as little as two years.

The Consumer Financial Protection Bureau is hoping to make it easier for homebuyers with simplified mortgage forms that help them compare terms and costs and by creating new rules that will protect homeowners from getting into loans they can't afford.

March Home Sales: Woodridge Market Shows Decline; Median Price Makes Gains

Republished from an article in the Woodridge Patch by Mary Ann Lopez on April 23, 2013

Woodridge saw a moderate decrease in the number of homes sold during the month of March. The median home price rose more than 25 percent, according to the Mainstreet Organization of Realtors.

The 9 homes sold in Woodridge during March 2013 represented a -18.2 percent decrease over March 2012, when 11 homes were sold, according to the Mainstreet Organization of Realtors (MORe). While the number of homes sold decreased, the median price of homes sold in March increased moderately in Woodridge. The median price increased 27.7 percent to $212,000 from $166,000 in March 2012.
The market for detached, single-family homes in suburbs throughout DuPage County experienced notable sales gains in March, MORe reported. MORe gets its statistics from Midwest Real Estate Data.
Hinsdale had the biggest percentage drop in the number of homes sold, with -37.9 percent fewer homes sold year over year. That adds up to 18 homes sold during March 2013 compared with 29 sold in March 2012.
Elmhurst had the biggest percentage increase, with 64.3 percent more homes sold year over year. That adds up to 46 homes sold during March 2013 compared with 28 sold in March 2012.
Tonya Corder, president of MORe and managing broker of Keller Williams Preferred Realty in Orland Park, cautioned sellers that the market still needs to shed more distressed properties before home prices make a complete recovery.
“The spring market hasn’t been this busy since 2007,” Corder said. “For homes that are priced right, multiple offers are coming in.”

	# of homes sold			Median sale price
Town	2013	2012	% change	2013	2012	% change
Burr Ridge	15	19	-21.1%	655,000	658,000	-0.5%
Darien	7	10	-30%	246,000	239,500	2.7%
Downers Grove	39	25	56%	274,000	267,000	2.6%
Elmhurst	46	28	64.3%	375,500	351,500	6.8%
Glen Ellyn	32	32	0%	338,500	255,625	32.4%
Hinsdale	18	29	-37.9%	775,000	780,000	-0.6%
Lemont	16	13	23%	326,250	192,000	69.9%
Lisle	8	12	-33.3%	272,050	261,000	4.2%
Naperville	102	85	20%	379,950	335,000	13.4%
Wheaton	44	35	25.7%	324,000	285,500	13.5%
Woodridge	9	11	-18.2%	212,000	166,000	27.7%

Illinois Supreme Court Rolls Out New Foreclosure Rules

On Feb. 22, the Illinois Supreme Court announced new rules establishing a uniform protocol when it comes to the foreclosure process. Among the rules outlined in the court's news release:

• Lenders must provide homeowners with information about the process and consequences of foreclosure.
• Lenders must seek modifications with eligible homeowners before completing a foreclosure.
• Improved legal notices to owners are required throughout the process and before a foreclosure sale.

Illinois Circuit Courts with mediation programs will be required to provide resources for HUD-certified consultation, free legal help and language interpretive services to those eligible and in need of them. Find media coverage of the new rules in the Chicago Tribune article, "New rules to govern Illinois foreclosures," and in the State Journal-Register, "Illinois Supreme Court issues rules on foreclosures."