Emily Dayton 3:57 p.m., April 27
Housing values in Western metro areas soaring
Fed's low rate policies the catalyst; but is this too far, too fast?
Housing values in Western markets continue to soar, according to data released this morning (April 25) by Zillow.com. Year-over-year prices for the period ended in this year's first quarter zoomed in Phoenix (up 24%), Las Vegas (22.3%), San Jose (22.1%), San Francisco (21.4%), and Sacramento (20.1%), the leaders. (Phoenix and Las Vegas are rebounding from extremely deep holes.) Nationally, the yearly gain was 5.1%, and prices in Chicago were down slightly and Cincinnati flat. San Diego's year-over-year gain was 17.1% and Los Angeles's 14.9%. Normally, housing prices nationally move up about 3% a year, says Zillow. However, these times are not normal. The Federal Reserve has pounded short term interest rates down to almost zero (below zero adjusted for inflation) and long rates, including mortgages, have been brought to extremely low levels. Speculators, obviously, constitute a good part of this market, and the gamblers seem to be betting on the West despite prices that are already very high compared with the rest of the nation. The Fed's easy money policy depends on unemployment staying high. Thus, the question is, as prices rise, how many regular residential homebuyers will be able to afford these prices. San Diego's median home value is now $396,800.
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