Home prices could grow as high as 7.2% in 2013, JPMorgan Chase concluded in a new report.
Analysts with the bank claim prices are posting historically strong gains as the market moves into the more active summer season.
With high investor demand contributing to booming home prices as well as growth in prices of lower-tiered units posting stronger gains than higher-tiered units in major metropolitans, JPMorgan ($54.27 0.77%) is confident in its 7.2% growth projections.
Furthermore, the banking giant has revised its projections to 3.9% in 2014 and 3.2% in 2015, with surprises likely to be on the upside.
“Despite the lack of data for investor demand, we saw all-cash sales remain higher than 30% of housing sales,” analysts at JPMorgan ($54.27 0.77%) said.
Given the limited housing inventory, net demand in April has climbed to the highest level since 2006.
At the same time, the market share of distressed sales declined below 20% for the first time since 2008, accounting for 18% of April’s sales, which is 10% lower than last year, JPMorgan explained.
Meanwhile, the Federal Housing Finance Agency recently announced the extension of both the Home Affordable Modification Program and the streamlined modification initiative through the end of 2015, boosting the housing market.
HAMP, which was originally scheduled to expire this year, has helped homeowners who are struggling to keep their loans current or who are already behind on their mortgage by lowering monthly payments.
The streamlined modification initiative gives borrowers who are at least 90 days delinquent another option to avoid foreclosure and lower their monthly payments without requiring documentation of financial hardship.
Recent housing and economic indicators have remained mostly positive as net demand climbed, distressed sales decreased and builders’ confidence improved, the JPMorgan analysis concluded.
For instance, the National Association of Realtor’s existing home sales index edged up 0.6% in April to a seasonally adjusted annual rate of 4.97 million.
After improving 22 consecutive months on a year-over-year basis, April’s sales number is at the highest pace since Nov. 2009 – when the market spiked to 5.44 million in response to the homebuyer tax credit, the report said.
“Despite an increase in inventory, net demand climbed to the highest level since 2006 at 3.3 million in April, pointing to a continuous recovery in home prices over the next few months,” the report added.
The author of this article is: Christina Mlynski
See the original post at: http://www.housingwire.com/news/2013/06/07/home-price-growth-projected-exceed-7-2013
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