As Home Prices Rise, Analysts Consider An Impact on the Economy

As Home Prices Rise, Analysts Consider An Impact on the Economy

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home ownershipHome prices have risen 10.9 percent compared to a year ago at this time, which points to a rising demand in housing, according to The Standard & Poor’s Case-Shiller index. With the largest annual gain in seven years, the report is an overall indicator that the economy could be on the uptick.

It also means that if you couldn’t afford a house when interest-rates and prices were low, you probably almost certainly are out of the market now.

Despite assurances from some analysts that the economy will improve because a home is the American consumer’s most significant asset, not all experts are buying in, according to the Wall Street Journal, which reports that “some economists and real-estate agents have warned that the current pace of gains isn’t sustainable and that some buyers could be priced out of the market, especially once interest rates rise.”

“Home prices are still down by 28% from their 2006 peak and have returned to levels last seen in late 2003. One year ago, home prices were 35% below the 2006 peak. The Case-Shiller index reached a bottom last March, which means the year-over-year comparisons could begin to show less dramatic growth in the months ahead,” the report says.

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