Shutterstock

The latest measure from the S&P/Case-Shiller home price indexes shows an 8.1 percent year-over-year increase.

Is it time to start worrying about a new housing bubble? There’s been plenty of commentary about investors snapping up houses in America. The Wall Street Journal recently reported:

"Currently, cash buyers—largely investors—make up about 32% of sales nationally, according to the National Association of Realtors. In Southern California, a favorite target for investors, absentee buyers accounted for 31.4% of purchases last month, up from an average of less than 17% between 2000 and 2010, according to DataQuick MDA, a real-estate research firm."

And all that investor money has turned the trajectory of US housing prices upside down over the last few months. House prices are gathering steam. The latest 20-city reading from the S&P/Case-Shiller home price indexes showed a 8.1 percent year-over-year increase.

Screen Shot 2013-03-26 at 9.25.26 AM

This is a good thing for the U.S. economy. The more house prices appreciate, the more people emerge from being underwater on their homes—owing more than they are worth. That increases the likelihood that they’ll be able to refinance to take advantage of lower rates. And lower monthly payments for housing will free up more money for consumers to spend elsewhere. Also, there are some indications that consumers feel more comfortable about spending when prices of their assets—such as their homes and stock portfolios—are rising.

The rise in home prices could help explain why US consumers have kept spending in recent months, despite the increase in payroll taxes that went into effect in January.

Top image: AZP Worldwide /Shutterstock. This post originally appeared on Quartz, an Atlantic partner site.

About the Author

Most Popular

  1. Life

    The Cities Americans Want to Flee, and Where They Want to Go

    An Apartment List report reveals the cities apartment-hunters are targeting for their next move—and shows that tales of a California exodus may be overstated.

  2. photo: a pair of homes in Pittsburgh
    Equity

    The House Flippers of Pittsburgh Try a New Tactic

    As the city’s real estate market heats up, neighborhood groups say that cash investors use building code violations to encourage homeowners to sell.  

  3. Life

    Can Toyota Turn Its Utopian Ideal Into a 'Real City'?

    The automaker-turned-mobility-company announced last week it wants to build a living, breathing urban laboratory from the ground up in Japan.

  4. Transportation

    In Paris, a Very Progressive Agenda Is Going Mainstream

    Boosted by big sustainability wins, Mayor Anne Hidalgo is pitching bold plans to make the city center “100 percent bicycle” and turn office space into housing.

  5. photo: San Diego's Trolley
    Transportation

    Out of Darkness, Light Rail!

    In an era of austere federal funding for urban public transportation, light rail seemed to make sense. Did the little trains of the 1980s pull their own weight?

×