U.S. Home Prices Jump 12.02 Percent

[deadparrot]

WASHINGTON - Average U.S. home prices jumped 12.02 percent from the third quarter of 2004 to the same period this year, a slowing from the record pace of the previous quarter yet still a strong increase, federal regulators reported Thursday.

The figures released by the Office of Federal Housing Enterprise Oversight, the agency that oversees the big mortgage-finance companies Fannie Mae and Freddie Mac, were the latest sign of a gradual cooling of the red-hot housing market. The Commerce Department reported Tuesday that sales of new homes jumped to an all-time high in October, in what could be a final spurt from a housing market that is expected to slow after five record-breaking years.

Rates of increase in home prices in the third quarter "were extremely strong, although some deceleration can be seen in a number of the faster-appreciating markets," OFHEO's chief economist, Patrick Lawler, said in a statement issued with the report. "Price momentum in the Pacific and New England states, in particular, has pulled back."

The agency noted that house prices grew far more rapidly over the last year than prices of other goods and services included in the Consumer Price Index — 12 percent versus 4.5 percent.

http://news.yahoo.com/s/ap/20051201/ap_on_bi_ge/home_prices

[joeybee12]

1. How is this possible?

Seriously, how is this possible?

The economy sucks, wages are declining...

[Hope springs eternal]

2. Federal Government?

Maybe they're trying to keep the economy afloat?

[joeybee12]

4. That's as good an explanation as any...

...seriously, it defies logic, and I wonder how hard the market will crash because of this.

[Shadder]

3. Quite simple really

Just down the street from us they tore down a quite nice woods on a hill, pushed half the hill down to make it level and put in a new street with about 25 or so new houses built as cheaply as possib. These house sold for between $169,000 to $224,000. The house that we are in before they built these was about a $98,000 to $120,000. The value of this house shot up to $150,000 overnight. Then the same people put in another new house which sold for $25,000 which caused the value of the one we are in to shoot up to $169,000. This, in a gang infestesd older subdivision where we get more grafetti every night.

[AlabamaYankee]

5. Easy Credit and Low Mortgage Rates

In some markets an astounding percentage of the mortgages written are interest-only, with little or no down payment. The buyers don't intend to keep the property for long. Instead they hope to sell it for a substantial capital gain and move up the scale. This of course only works until the bubble bursts, but in the meantime it drives up the price.

[AX10]

6. That's what is happening.

Sadly, this will also make for a hard fall too.

[MADem]

7. Interest only loans, perhaps???

Which are stupid in the extreme, but some people just WANT that McMansion when all they can really afford is that 1970's style ranch....