Analysts disagree, but it’s tough to ignore the eerily familiar signs:

• January 2013 prices posted the biggest year-over-year gains since June 2006
• Phoenix prices climbed 23 percent from January 2012 to 2013
• California prices have posted double-digit spikes in a year-over-year basis for eight consecutive months

But before you hop on the bubble train, consider this: Prices are still down 28.4 percent from the 2006 peak, according to the Case-Shiller index.

Baffled? Let’s get a handle on the data and see how other analysts are reading the market. Is another housing bubble imminent?

Are we experiencing healthy growth, or is another housing bubble forming?

YES: “We’re heading into a housing bubble”

Mortgages remain out of reach for many would-be buyers. Tight credit standards are curtailing prices, but professor of economics Karl Smith fears looser standards are right around the corner.

“Some time in the near future it is very likely that credit standards…will fall,” said Smith in a recent Forbes.com article. “This rapid increase in the number of buyers and their purchasing power will likely drive home prices into a bubble. Likely not as large as 2005, but it’s not out of the question that the bubble could be even larger.”

YES: “Growth is driven by investors and is not sustainable”

Analysts like David Stockman believe that first-time home buyers and trade-up buyers must be present in a healthy market recovery.

Logical enough, right? The problem for Stockman, former director of the Office of Management and Budget in the Reagan Administration, is that today’s recovery is missing those key participants. Bolstered by investors, the current recovery appears unsustainable to Stockman.

“We don’t have a real organic sustainable recovery,” Stockman said to Yahoo’s Daily Ticker. “…Massive amounts of ‘fast money’ is rolling in to buy, to rent, on a speculative basis for a quick trade. And as soon as they conclude prices have moved enough, they’ll be gone as fast as they came.”

Some analysts say we’re hitting the panic button too early.

NO: “We’re panicking way too early”

Inventory falls far short of demand in many markets. Economist Diane Swonk says a bubble can’t exist until a healthy portion of that demand is satisfied.

“Some worry that a bubble may be forming but we still have a long way to go to meet pent up demand, let alone any level considered ‘normal,’” said Swonk, Chief Economist and Senior Managing Director of Mesirow Financial.

NO: “We’re in a strong recovery, not a bubble”

Housing prices are rising fast in California. Very fast. The median price for existing California homes rose 24.2 percent from February 2012 to February 2013.

But as Realtor.com president Errol Samuelson points out, median prices are still far below the 2006 peak, and should be no cause for alarm.

“It’s important to put these increases into perspective,” Samuelson said to AOL. “Despite these gains, home prices nationally in January were still 21.4 percent lower than they were at the peak of the housing boom in June 2006. Today, California prices are still 34.8 percent below the peak level. California prices haven’t even recovered half of what was lost.”

Our position: Who can spot a bubble until it pops?

Wikipedia says it best: “An economic bubble is difficult to identify except in hindsight.”

Consider that well into 2005, experts (including then Federal Reserve Board Chairman Alan Greenspan) downplayed the possibility of a housing bubble. The ensuing price plunge was the steepest since the 1989 Savings and Loan crisis.

So we can theorize. We can analyze. But can we ever truly know if a bubble exists until it pops?

Photos courtesy of Nathan Jongewaard, jmawork

And of particular interest to our military buyers and military-friendly agents: VA loans are growing in popularity, and continue to feature relaxed credit standards.

Existing home prices rise 9.5%

A price increase of nearly 10 percent adds to the evidence that markets are in recovery. According to the NAR’s report, existing home prices climbed 9.5 percent from August 2011 to August 2012. The national median existing home price was $187,400 in August, and reflects the highest year-over-year increase in 6 ½ years.

The latest NAR report on existing home sales is full of good news for the housing market. Finally.

Existing home sales rise 9.3%

Ready for more good news? The number of existing homes sold in August 2012 also climbed considerably from a year ago. Total existing home sales rose 7.8 percent to a seasonally adjusted annual rate of 4.82 million in August from 4.47 million in July, and were 9.3 percent higher than the 4.41 million-unit level in August 2011.

Time on market falls

Homes sold more quickly in August, suggesting that competition among buyers is increasing. The median time on market fell to 70 days in August, which is a 23.9 percent drop from 92 days in August 2011. Almost a third (32 percent) of homes sold in August were on the market for less than a month.

Inventory tightens

The total number of homes on the market actually rose in August, but the quicker sales pace served to lower the NAR’s “months-supply” figure. Total housing inventory climbed 2.9 percent from July to August, and settled at 2.47 million existing homes by the month’s end. That figure represents a 6.1-month supply at the current sales pace, down significantly from an 8.2-month supply in August 2011.

What’s holding back a full recovery?

Winds seem favorable and conditions ripe for a continuing recovery. But as conventional lenders continue to tighten credit standards, financing remains the major stumbling block for prospective buyers.

“If most of the financially qualified buyers could obtain financing, home sales would be about 10 to 15 percent stronger, and the related economic activity would create several hundred thousand jobs over the period of a year,” said NAR President Moe Veissi.

VA loans remain bright spot across lending horizon

Fortunately for military buyers, VA loans have maintained their relaxed credit standards. Buyers with credit scores above 620, consistent income and steady employment still have a good chance of obtaining VA financing.

And in fact, more and more buyers are going the VA route. The VA has guaranteed nearly 500,000 loans so far in 2012, according to John Bell, assistant director of loan policy at the VA. That number is 30 percent above the 2011 figure, and nearly three times the number of VA loans issued in 2008.

Have VA loan questions?

Buyers and agents can find additional VA loan information on the Veterans United Realty blog or our partner blog, VA Loans Insider.

For immediate answers, contact a Veterans United Home Loans VA loan specialist at 888-212-1958.

Photo courtesy of Richard Moross

Sales of existing homes rose in 2011, driven in part by lower prices created through foreclosure.

“2011 Worst Year Ever for New Home Sales”

“Existing Home Sales Show Market Rebound in 2011”

After reviewing conflicting year-end headlines, it’s tough to know how to feel about 2011 home sales.

The truth is that we’re still in the midst of a bad time for the housing market. But 2011 brought some good news to the forefront, raising hopes that a housing recovery is in the works.

The Good News: Existing Home Sales Rise

Sales of existing homes rose 1.7 percent in 2011 to 4.26 million units, according to the National Association of Realtors (NAR). The final quarter of 2011 showed three consecutive months of improvement, prompting some analysts to announce a slow turnaround in the housing market.

“The pattern of home sales in recent months demonstrates a market in recovery,” said Lawrence Yun, chief economist for the National Association of Realtors.

Several factors have spurred the uptick in existing home sales. Following six consecutive months of job growth, the December 2011 unemployment rate fell to its lowest level in almost three years. As more folks return to work, more loan applicants are able to meet mortgage criteria.

Record-low interest rates are also drawing buyers into the market. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage fell to an all-time low of 3.96 percent in December.

Low interest rates have been accompanied by a steady decline in home prices, which makes it an undeniably smart time to enter the market. According to NAR, the national median sales price for existing homes fell to $166,100 in 2011, down from $172,900 in 2010 and $172,500 in 2009.

The Bad News: Sales of New Homes Fall

Unfortunately for builders, 2011 was the worst year on record for new home sales. The Commerce Department reported that a mere 302,000 new homes were sold last year, less than half the amount economists say must be sold for an economy to be considered “healthy.” The 2011 figure reflects a 6.2 percent drop from the number of new homes sold in 2010.

Why are new home sales lagging in the same environment that’s creating more existing home sales?

Builders of new homes often can’t price their properties cheap enough to compete with distressed properties. NAR found that foreclosures sold at an average discount of 22 percent in December, while short sales closed 13 percent below market value.

Big numbers of buyers snapped up distressed bargains in 2011. Foreclosures and short sale properties accounted for 32 percent of sales in December.

Meanwhile, 157,000 new homes sat on the market in December. At the year-end sales pace, it will take approximately 6.1 months to clear the new home backlog.

2012 Predictions

What’s ahead for the real estate industry? Forecasts as are contradictory as headlines, and vary in their levels of optimism.

Enthusiastic experts point to job creation and a slow rise in existing home sales as evidence of a housing rebound. Glass-half-empty predictors refuse to jump on the recovery bandwagon until the glut of inventory is reduced and prices begin to rise.

It’s tough to deny that pockets of recovery are definitely developing. Nationwide recovery will certainly take more time, but hopefully a majority of 2012’s year-end headlines will reflect a clear and positive direction for the industry.

Photo courtesy of respres