WASHINGTON: Home prices across America rose 10.9% from March 2012 to March this
year, the biggest year-on-year increase since 2006, in a sign that the long
decline that devastated the US economy and affected the rest of the world,
including India, is over.
According to the closely-watched Standard & Poors/Case-Shiller index, all 20 US cities measured posted annual gains for the third straight month, driven by an uptick job gains and near-record low mortgage rates which are below 3% for a 15-year loan. In fact, the absurdly low interest rates and huge inventory arising from foreclosures and defaults attracted bargain hunters from all over the world to the US.
The most spectacular gains were made by cities that were devastated by the downturn -- Phoenix rocketed up by 22.5%, San Francisco by 22.2% and Las Vegas by 20.6%. Atlanta, Detroit, Los Angeles, Portland, Minneapolis, San Diego, Tampa, Miami, and Seattle posted double-digit increases as well. New York City had the smallest annual increase at 2.6%.
Economists have waited years for this news because housing is at the centre of the American sense of well-being. Nearly 70% of Americans owned homes at the peak in 2004, but that number fell to the mid-60s after the housing bubble burst in 2007 when Americans who overpaid for extra-large homes found they just could not keep up with the mortgage payments even as they lost jobs.
The housing bust led to the urban legend of young professionals and middle-aged men moving back to their ageing parents' home and garage.
The continuous rise in home prices for a decade after the late '90s is what made Americans feel wealthy and generated the urge to splurge. Banks too lend money more readily when home prices are rising, fuelling construction and other activity, and driving the overall economy. All that suffered a big blow in 2007 when both people and banks found themselves overextended.
Despite the uptick though, housing prices are still well below the average from before the financial crisis and it will take at least couple more years for a full recovery, according to experts. It will need continued job growth and government spending.
But even the whiff of recovery has sent people rushing off to buy stocks of companies that make building material, appliances and other secondary and tertiary stocks that will benefit from a housing rebound.
Most Popular Stories
- Prosecutor to Investigate Walmart Police Shooting
- Mark Sanchez Suddenly a Hot QB Commodity
- GM to Announce New Jobs in Tennessee
- Hispanic Entrepreneurs Set Pace in Florida
- Chrysler Gets Nod as a Top Employer for Hispanic Women
- Smith & Wesson Misses Target
- Emirates Hit Libyan Targets With Airstrikes
- Marco Rubio Warns Obama on Deportations
- Michael Brown Funeral: Can Americans Change the Script of Violence?
- Laid-off Workers Return to Their Fields