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November 25, 2015

Home Prices Up 5.5% in Sept

by Bob Schwartz

San Diego home prices - home pricesHome Prices jump 5.5% according to today’s S&P/Case Shiller Home Price Index report.

The S&P 20-city composite rose 5.5 percent year over year in September, compared with consensus estimates for a 5.2 percent rise.

In San Francisco the September home prices increased at the fastest pace, up 11.2 percent on the year, this was followed by Denver and Portland, Oregon, which turned in gains of more than 10 percent! All 20 cities surveyed reported higher prices than a year earlier.

San Diego Home Prices:

The good news for San Diego home owners was that the change in Case-Shiller San Diego, CA Home Price Index is at 6.62%, compared to 5.97% last month and 4.99% last year. This is higher than the long term average of 5.48%

Home sales have increased 3.9 percent in the past 12 months. At the same time, the number of homes for sale, has fallen 4.5 percent.

So, let’s see . . . Home prices rising, wages flat……, seems about right in the “new normal”, must be the uber low interest rates and the fear of the Fed raising rates that’s motivating people to take the plunge.

The big question will be whether these people can actually afford the homes if the economy tanks again? Won’t matter if your mortgage is 3% on a 30 year note when you’re buying real estate at premium prices (over paying) with little to no down payment.

We could be seeing another set up if there is a down turn in economy and in turn the real estate market. Hopefully on a somewhat smaller scale as compared 2008/2009 but would still be bad to have it happen twice in the course of 10 years.

Home Prices – Analysis

“Home prices and housing continue to show strength with home prices rising at more than double the rate of inflation,” says
David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The general economy
appeared to slow slightly earlier in the fall, but is now showing renewed strength. With unemployment at 5% and hints of
higher inflation in the CPI, mos t analysts expect t the Federal Reserve to raise its Fed Funds target range to 25 to 50 basis
points, the first increase since 2006. While this will make news, it is not likely to push mor tgage rates far above the recent
level of 4% on 30 year conventional loans. In the last year,mortgage rates have moved in a narrow rangeas home prices
have risen; it will take much more from the Fed to slow home price gains.

Home Prices Up

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