U.S. Home Prices See Biggest Jump in 7 Years

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Wilfredo Lee/AP
By Christopher S. Rugaber

WASHINGTON -- U.S. home prices jumped 12.2 percent in May from a year ago, the most in seven years. The increase suggests the housing recovery is strengthening.

Real estate data provider CoreLogic said Tuesday that home prices rose from a year ago in 48 states. They fell only in Delaware and Alabama. And all but three of the 100 largest cities reported price gains.

Prices rose 26 percent in Nevada to lead all states. It was followed by California (20.2 percent), Arizona (16.9 percent), Hawaii (16.1 percent) and Oregon (15.5 percent).

CoreLogic also says prices rose 2.6 percent in May from April, the fifteenth straight month-over-month increase.

Steady hiring and low mortgage rates have encouraged more Americans to buy homes. Greater demand, a limited number of homes for sale and fewer foreclosures have pushed prices higher. Prices are still 20 percent below the peak reached in April 2006, according to CoreLogic.
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Sales of previously occupied homes topped the 5 million mark in May for the first time in 3½ years. And the proportion of those sales that were "distressed" was at the lowest level in more than four years for the second straight month. Distressed home sales include foreclosures and short sales. A short sale is when a home sells for less than what is owed on the mortgage.

Home sales are expected to increase in the coming months. That's because the number of people who signed contracts to buy homes rose in June to the highest level since December 2006. There's generally a one- to two-month lag between a signed contract and a completed sale.

One worry is that higher mortgage rates could slow the housing recovery. Still, rates remain low by historical standards. And increases in rates could boost home sales. That's' because many Americans may act to lock in the lower rates before they rise further.

A survey by the University of Michigan released last week found more Americans believe it is a good time to buy a home because both rates and prices are just starting to rise.

Rates have been trending higher for two months. And the average rate on a 30-year fixed mortgage leaped to 4.46 percent last week, according to mortgage buyer Freddie Mac. That's the highest in two years and a point more than a month ago.

Mortgage rates surged after Federal Reserve chairman Ben Bernanke said last month that the Fed could scale back its bond buying later this year and end it next year if the economy continued to strengthen. The bond purchases have kept long-term rates down.

Economists say that higher mortgage rates are unlikely to stifle the housing recovery. A more critical issue is whether potential buyers can get loans. There are signs that banks have become more willing to extend mortgages.

Where Millionaires Live in America
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U.S. Home Prices See Biggest Jump in 7 Years

Metro Population: 1.8 million

Concentration of Millionaire Households: 8.3%

Number of Millionaire Households: 52,043

Median Income for All Households: $88,339

Median Home Value: $674,800

The original California capital has come a long way from its farm town origins. Today, San Jose is the center of Silicon Valley. And the area, including Sunnyvale and Santa Clara, is home to some of the world's biggest tech companies, including Apple, Hewlett-Packard, Intel and Google. Such employers tend to reward their geeks handsomely. Google even keeps its interns well-heeled, paying those specializing in software engineering an average $6,432 a month, according to employment research firm Glassdoor. The hefty paychecks can help cover housing costs — the San Jose area's median home value is the highest on this list, and a whopping 20.8% of houses are worth $1 million or more, compared with just 2.3% of all U.S. homes.

Metro Population: 5.5 million

Concentration of Millionaire Households: 8.6%

Number of Millionaire Households: 182,993

Median Income for All Households: $88,486

Median Home Value: $399,400

The nation's seat of power is topped with a plump cash cushion. The D.C. area is home to the greatest number of millionaire households on this list and ranks fourth overall behind New York, Los Angeles and Chicago. In D.C. proper, you can find many moneyed residents, including high-profile politicians, lobbyists and contractors, living in the townhouses of Georgetown and Capitol Hill. Outside the District, millionaires can enjoy the suburban life in Arlington, Va.; Bethesda, Md.; and other well-off neighborhoods.

Metro Population: 320,087

Concentration of Millionaire Households: 8.9%

Number of Millionaire Households: 12,078

Median Income for All Households: $56,876

Median Home Value: $317,200

Beautiful beaches and top-drawer retailers lay out the welcome mat for thousands of millionaires, as well as leisure travelers, who flock south for the warmth of the Gulf Coast. Shoppers seeking upscale styles have many options, including Cartier, Gucci and Louis Vuitton, at the open-air Waterside Shops. And golfers have just as many choices when it comes to links – there are more than 90 golf courses nearby. Another kind of green that may interest people in the area: eco-tourism. You can get a glimpse of the local wildlife a short drive away at Everglades National Park and Ten Thousand Islands. While real estate in the area tends to become more affordable as you move inland, the median value of homes in prime coastal locales such as Pelican Bay and the City of Naples is about $800,000.

Metro Population: 911,196

Concentration of Millionaire Households: 8.9%

Number of Millionaire Households: 30,048

Median Income for All Households: $82,558

Median Home Value: $466,700

The southwest coast of Connecticut, stretching from Bridgeport to the border with New York, provides a perfect (and preppy) suburban base for high-powered commuters, many of whom work and play in nearby Manhattan. Nearly 34,000 residents, or 8.1% of the local labor force, are employed in management positions, earning about $68 per hour on average. And 16.7% of households report an annual income of $200,000 or more; only 4.5% of the country's households pull in that much each year. Those high paychecks can help cover the area's high costs. Stamford proper is one of America's most expensive big cities, and typical homes in small affluent towns such as Greenwich and Darien go for $1 million.

Photo: Chrisbkes, Flickr.com

Total Metro Population: 18,040

Concentration of Millionaire Households: 11.7%

Number of Millionaire Households: 906

Median Income for All Households: $104,914

Median Home Value: $300,700

This tiny New Mexico town has the smallest population, as well as the highest concentration of millionaires, on this list. Chalk up the density of affluence to the National Laboratory, a research facility focused on national security and the county's largest employer. Since the lab was established in 1943 as site Y of the Manhattan Project, it has drawn some of the world's top scientific minds with state-of-the-art facilities, currently including more than 1,200 buildings on a 36-square-mile campus, and generous paychecks. In fact, the area's six-figure median household income is the highest on this list. And relatively low living costs — just 2.9% above the U.S. average — will help wealthy residents hold on to their fortunes.

Photo: Larry1732, Flickr.com

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