A long home run
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Itâ€™s been a very, very good first seven months of the year for home prices. The WSJâ€™s Nick Timiraos notes that home prices rose in the first seven months of 2013 at the fastest rate since 2004, the approximate start of the housing bubble. â€śThe year-to-date gains,â€ť he adds, â€śare the most eye-openingâ€ť:
Prices in July stood 11.2% above the level of December 2012. By contrast, prices in the same period last year were up 5.8%. In 2004, prices rose by 11.3% year-to-date through July.
Extend the timeframe to a year and things still look rosy, bordering on bubbly depending on your perspective: Bloombergâ€™s Shobhana Chandra writes that the 12-month increase of 12.4% is the biggest annual gain since February 2006. Calculated Riskâ€™s Bill McBride notes that this mean that â€śin real terms – and as a price-to-rent ratio – prices are mostly back to early 2000 levelsâ€ť.
There are indications that some investors are ready to use strong price increases as a reason to exit investments made after the financial crisis. Goldman Sachs, JP Morgan, and George Soros are filing to sell a little more than half of their $500 million initial investment in mortgage insurer Essent.
Reutersâ€™ Matt Goldstein reports that in another part of the housing market, the â€śpressure keeps building on small players in the buy-to-rent trade to cash out and flip the foreclosed homes they snapped up to the biggest investors in the spaceâ€ť. Larger investors like Blackstone, meanwhile, seem content to wait for securitizations or IPOs to see gains. — Ben Walsh
On to todayâ€™s links: