Home Price Appreciation Jumps Up
According to the CoreLogic Index (CLI), year-over-year home price appreciation jumped by 11.9% in June, which is the second largest year-over-year gain since “the days of the housing bubble.”
CoreLogic, along with Case-Schiller and RadarLogic, is a widely followed index relative to real estate values, though CoreLogic separates distressed sales from non-distressed sales, unlike the other two. Some analysts say that non-distressed sales more closely indicate the core real estate market in general.
Underwater homes, meaning homes where more is owed on the mortgage than what to home is worth, have been a drag on the true real estate market, and on overall national economic growth. Brent Nyltray, Sr. Real Estate Analysts for Market Realist, says “Real estate values are big drivers of consumer confidence and spending, so they have an enormous effect on the economy.”
He adds that, “Real estate prices are also a big driver of credit availability in the economy. Mortgages and loans secured by real estate are major risk areas for banks. When real estate prices are falling, banks become conservative and reserve funds for losses. Conversely, increasing real estate prices make the collateral worth more than the loan, which encourages them to lend more.” As a consequence real estate and mortgage professionals watch the real estate indices closely.
The CLI also shows that home price appreciation went up 10% for the first half of this year, and this is the “best pace recorded since 1977.” Nyltray adds that sales for both distressed and non-distressed homes went by equal amounts.
CoreLogic data shows that 99 of the 100 markets that are measured had year-over-year gains, which he says clearly indicate a very broad recovery for the real estate market. On a state-by-state basis, only Delaware and Alabama had month-over-month declines.