There’s more very good news for the housing market. The S&P Case-Shiller index, released last week, shows house prices rising 8.1% in January, the biggest increase since June 2006. A different government report shows a decline in sales in February from the previous month, but that’s still up 12% over earlier levels. The U.S. Census Bureau reports that privately-owned housing starts in February were up 27.7% over the same time last year. Experts suggest bad weather may be responsible for the slower growth in February, and the growth trend is expected to pick up pace during the rest of the year.
Much of the growth has been in markets that were particularly badly hit during the housing bubble. Phoenix, for example, saw a 23% increase. San Francisco, Las Vegas, Detroit, Atlanta, Minneapolis, Los Angeles and Miami were also up more than 10%.
In the fallout of the housing bubble, seven million people lost their homes to foreclosure or in short sales. Now, with an improving economy and job numbers, some of those families are back in the market. Veteran Administration backed loans can be obtained only two years after a foreclosure, and with the enormous benefit of having lower mortgage rates. Extenuating circumstances like health issues, natural disasters or a layoff can reduce the wait time to three years for Fannie Mae and Freddie Mac.
Increasing employment numbers, low mortgage rates, fewer homes in foreclosure and a tight inventory of homes are all factors experts believe are behind the current boom. In turn, the stronger housing market helps put more people to work. And it helps homeowners who owe more on their mortgages than their homes were worth. As they regain equity, they’ll also be able to refinance at lower rates.