U.S. home prices are at their highest point since May 2006 according to data released by CoreLogic® yesterday. December 2012 showed an 8.3 percent increase since December 2011. The CoreLogic Home Price Index rose for the tenth consecutive month with a 0.4 percent increase since November. Only four states failed to register an annual gain.
CoreLogic is predicting a slight decline in home prices from December to January due to seasonal variation, but it is still forecasting a 7.9 percent year-over-year price increase in January.
CoreLogic’s President and CEO Anand Nallathambi said, “All signals point to a continued improvement in the fundamentals underpinning the U.S. housing market recovery.”
The reported in Arizona (20+ percent), Nevada, Idaho, California and Hawaii have caused some contrarian concerns. CNBC’s Diana Olick warned of a “new housing bubble.” Citing similar numbers leading to the bubble that burst in 2006, Olick claimed, “Historically, prices rise about three to four percent a year.” Olick attributes the large increases in some states to “investor price drives” and worries that the volume of distressed properties headed for the market will depress prices. If those investors decide to “take their profits,” the market in the double-digit increase states may sharply decline. Those states are not yet close to recovering from the 2006 bust.
Contrarians help us to keep both eyes open. As Robert Shiller recently noted, nobody really knows what the housing market will do in 2013. Most economists connected with housing indices have been issuing optimistic prognostic reports for months.