A long home run
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It’s been a very, very good first seven months of the year for home prices. The WSJ’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. “The year-to-date gains,” he adds, “are the most eye-opening”:
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: Bloomberg’s Shobhana Chandra writes that the 12-month increase of 12.4% is the biggest annual gain since February 2006. Calculated Risk’s Bill McBride notes that this mean that “in real terms – and as a price-to-rent ratio – prices are mostly back to early 2000 levels”.
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.
Reuters’ Matt Goldstein reports that in another part of the housing market, the “pressure 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 space”. Larger investors like Blackstone, meanwhile, seem content to wait for securitizations or IPOs to see gains. — Ben Walsh
On to today’s links: