Home Pricing Index
After months of stagnant data and low interest rates, positive news has arrived regarding the housing market. The Standard & Poor’s/Case-Shiller home-price index released this week found that home prices had the largest gain in February since 2006. For current homeowners, this news could mean potential refinancing opportunities, and banks may begin to prepare for these customer needs.
The Index looked at 20 cities in the U.S. and found that all had an average increase in price since February of last year for the second month in a row. The cities with the largest increases were Phoenix, San Francisco and Las Vegas, though five additional cities had a double-digit increase in the past year.
The Wall Street Journal attributes this increase to a lack of inventory around the country after years of low demand, and bidding wars have already begun to appear.
“The lack of inventory has created headaches for home buyers, particularly for first-time buyers looking for entry level properties in markets such as Las Vegas and Tampa, Fla., where investor demand is exceptionally strong,” the article wrote. “Investors are able to make all-cash offers, winning deals against buyers that need to obtain a mortgage and must get the home to appraise at their asking price.”
Home construction is also on the rise, potentially taming this trend as inventory reaches the level of demand. Still, for banks and current homeowners, increasing home prices mean new refinancing opportunities, especially as interest rates continue to remain at historic lows. To prepare for this increase of businesses, financial institutions can invest in credit and risk management software to prepare for these borrowers, and continue to stay solvent as home prices rise.