Monday, June 11, 2012

First Person: Are Home Values Bouncing Back?

For the past several years, I've watched the value of my Florida home steadily decrease. But this past month was the first time I've seen a substantial jump in the value when researching the estimated value on

We bought our 1,800-square-foot home for about $183,000 in 2005 at the top of the housing bubble. Since then, we have deal with being underwater on our mortgage as the value plummeted to as low as $109,000.

This month, the value of our house increased by $1,600 to settle in at $111,200, a number which puts us right side up on our mortgage. We now have a few thousand dollars in equity in our home.

Tracking home prices
CNN Money offers a local forecast of home prices that tracked 384 markets. In the Tampa-St. Petersburg, Florida area where I live, housing values were expected to fall 3.4 percent between the second quarter of 2011 and 2012, but then go up 3.9 percent between the second quarter of 2012 and 2013.

According to an article by Yahoo Finance Breakout, home prices were set to drop in 2012. But despite those earlier predictions, the latest data from the Federal Housing Finance Agency shows that national home prices rose 0.6% during the first quarter. It's the first price gain since 2007, one Yahoo Finance story reports.

We seem to be experiencing a housing recovery earlier than expected. But I question whether it is a "real" housing recovery or just a manipulated one.

Manipulating the housing market
Although I'd love to believe that house values are going up because there is a higher demand for homes, I know that isn't really the case. I've noticed that after several "price changes" that involve lowering the price of foreclosures, the banks have had the listings removed. Banks, from what I've seen, refuse to unload properties for less than they believe they are worth.

This may be positive for the long-term values of people who own homes in subdivisions with bank-owned properties. I saw one home listed for $114,000 that dropped down to $104,900 and then to $94,900 before the listing was removed. It may become like the home across the street from me that has been vacant for four years.

Seeing the beauty of the short sale
A close friend purchased a short sale in my same subdivision last year for $94,900. Her home, according to the estimates, is now worth $103,100. In the last 30 days, her home value has increased $3,300 perhaps because of similar properties in our subdivision that sold for higher amounts. The beauty of the short sale is that she bought a home sold for $111 a square foot in 2005 for only $58 a square foot. Unlike foreclosures that have been left vacant, she didn't need to worry about mildew, vandalism or missing appliances.

No matter how you cut it, short sales still look like a better deal for the home buyer compared to foreclosures. As home values bounce back, people who purchased short sale homes may see the fastest appreciation.

I'm worried property taxes might go up too much as housing prices recover in the Tampa area. It's a matter of being careful of what you wish for.

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