Tags: JPMorgan | home | prices | 9.7%

JPMorgan: Home Prices Could Jump 9.7% Next Year

Tuesday, 18 Dec 2012 08:00 AM

Home prices could climb as little as 3.4 percent and as much as 9.7 percent next year, according to JPMorgan Chase estimates.

The bank boosted its base-case growth estimate to 3.4 percent from 1.5 percent after concluding that net demand for housing in 2012 has surpassed 2 million homes, the first time since 2006, according to The Wall Street Journal. Net demand is defined as a measure of the pace of existing home sales minus the inventory of homes available for sale.

“Net demand has picked up a lot in 2012,” said JPMorgan Chase strategist John Sim, The Journal added.

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“Once you get north of the 2 million territory, you are in the positive growth area unless you get a lot of distressed inventory, which this year hit a low point.”

U.S. home prices nationwide increased 6.3 percent on year in October, the biggest increase since June 2006, according to CoreLogic.

October represented the eighth consecutive increase in home prices nationally on a year-over-year basis.

“The housing recovery that started earlier in 2012 continues to gain momentum,” Mark Fleming, chief economist for CoreLogic, said in a statement.

“The recovery is geographically broad-based with almost all markets experiencing some appreciation. Sand and energy states continue to experience the most robust appreciation and some judicial foreclosure states are even recording increasing prices.”

The future looks good for the industry, thanks to falling inventories, CoreLogic added.

“We are seeing an ongoing strengthening of the residential housing market,” Anand Nallathambi, CEO of CoreLogic, said.

“Reduced inventories and improving buyer demand are contributing to stability and growth in home prices which is essential to the long term health of the housing market and the broader economy.”

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

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