If you housing was going to cool off, you thought wrong.
The Case-Shiller Home Price Index, which covers roughly half of U.S homes, showed that prices rose again during February. For the 20-city composite index, home prices improved an impressive 9.3% year-over-year, marking the highest annual growth rate since May 2006.
In fact, while eight areas posted a month-over-month decline, all 20 cities covered by the index enjoyed seasonally adjusted YOY gains for at least the second straight month — something that hasn’t happened since 2005.
If that weren’t enough, prices for all the top 10 cities shot up by double-digits from the year-ago period.
Let’s take an individual look at those 10 cities in the 20-city composite index with the largest annual gains in prices this February:
YOY Increase: 10%
In Tampa, prices posted a 0.6% gain from January to February, but were still a solid 10% better since the same time in 2012.
While month-over-month growth lagged that from December to January, the 10% one-year increase was a slight improvement from January’s 8.9%, and the first time Tampa home prices have climbed by double digits.
According to The Tampa Tribune, though, much of the gain could be thanks to big, out-of-state investment groups bidding up prices. In March, the paper reported that nearly half of purchases were cash buyers — likely investors.
“Firms are buying thousands of homes in Florida for cash, many of them foreclosures, and forcing buyers who actually want to live in the homes to outbid them,” the paper reported.
#9: San Diego
YOY Increase: 10.2%
Next up, we have San Diego — another city enjoying its first month of double-digit YOY growth. The one-year gain in home prices there was 10.2%, slightly better than the month before.
Things got better month-to-month as well, with prices improving 0.6% after declining the same amount from December to January.
The good news doesn’t end there. According to Erik Bruvold of the National University System Institute for Policy Research, the uptick in home prices is right in line with job growth — something that doesn’t hold true for many other cities on the list.
“San Diego’s housing prices have increased about 10 percent,” he said. “That puts us about ninth in all metro areas. If you look at employment growth during the same period of time, that puts us about eighth, so there’s a decent alignment there.”
It also makes San Diego the third most expensive market in the nation.
YOY Increase: 10.4%
For our next city, we head down south to Miami.
Home prices in the steamy locale barely bested San Diego, gaining 10.4% over February 2012.
Such growth is nothing new for Miami, though. In January, for instance, its prices enjoyed an even better 10.8% improvement.
In fact, according to NuWire Investor, “Housing experts had once predicted that a full recovery in the residential real estate market may take 10 years, but many are changing their tune after the lightning-fast turnaround experienced in 2012 (while) others are forecasting future price growth and a positive outlook for the city.”
YOY Increase: 12%
When it comes to month-over-month numbers, Minneapolis’ home prices have been moving in the wrong direction. From December to January, they fell 0.5%, then followed that up with a 0.9% fall from January to February.
Still, its “falling” prices are significantly higher than they were a year ago. In January, Minneapolis enjoyed a 12.1% year-over-year improvement, while February’s gain was right in the same ballpark.
One factor in that increase is that fewer of the homes being sold are distressed properties. According to a real estate agent in the area, “We are seeing the foreclosure market decreasing. Foreclosure sales are down, as are new foreclosure listings, while traditional sales are increasing.”
Another catalyst for the rising prices: a low inventory of homes for sale.
#6: Los Angeles
YOY Increase: 14.1%
No matter how you slice it, things are moving up in Los Angeles. The city’s 14.1% year-over-year increase in home prices was 2 percentage points better than January’s climb.
Things got sweeter month-over-month as well. Prices gained 1% from January to February — the third highest gain out of all 20 cities and slightly better than the 0.9% increase from December to January.
Many don’t think L.A.’s big gains are a good thing, though. The Los Angeles Times reported that the city’s rising prices are making “it more prone to a new housing bubble than many other major cities,” since the prices are rising significantly faster than income.
Others are referring to the nation’s second most-expensive market as approaching a mini-bubble.
YOY Increase: 15.2%
Detroit’s home prices might have fallen 0.6% from January to February, but that slightly lower month-over-month number was still more than 15% higher than prices in February 2012.
Even with that gain, though, Detroit’s price level of just more than $80,000 remains the lowest on the list by a landslide. Plus, there are some signs that the housing recovery in the city might not be as strong as it seems.
The main one: low inventory. The Detroit Times summed it up, saying “The price hikes are partially due to a mounting problem: The number of homes for sale is shrinking. That shortage already is starting to put some cracks in the foundation of the rebounding housing market.”
YOY Increase: 16.5%
The second cheapest city on the list is enjoying eye-popping price gains. Atlanta’s home price levels were just under $100,000 in February — a solid 16.5% improvement from the same time a year ago, though exactly the same as the month prior.
At this point in the game, it’s a seller’s market down South, with more buyers than houses available. Many also expect that “rebounding prices for housing in metro Atlanta (should) help revive the housing and construction industry.”
The cherry on top: Atlanta remains one of the least bubbly regions in the country.
#3: Las Vegas
YOY Increase: 17.6%
Prices just keep on climbing in Vegas as well. The city’s 17.6% year-over-year increase in home prices was 2.3 percentage points better than January’s climb.
Things moved up month-over-month as well, with prices gaining 1.6% from January to February, as they did from December to January.
As is true in many locales, though, institutional investors have been biggest drivers of prices while “more traditional buyers and sellers are sitting out of the market,” according to Business Insider.
In fact, Robert Shiller himself said that Las Vegas is “starting to come up with some exuberance,” referring to it as one of the most “dramatic places.”
#2: San Francisco
YOY Increase: 18.9%
We’re back to California. In San Francisco, prices posted a 0.5% gain from January to February but were nearly a whopping 19% higher since the same time in 2012.
San Fran is used to such big numbers, though. February’s one-year increase was a only slight improvement from the month before, when prices gained 17.5% — again the second highest improvement.
Of course, that’s not really good for anyone who actually wants to live in San Francisco. Recent reports actually say that “the city’s home prices are so appreciated, it’s nearly impossible for residents to afford living there.”
And again, it’s the same story, different city. As Housing Wire put it: “Even in the most affordable neighborhoods in the city, inventory is limited and competition is strong, with homebuyers facing all-cash offers as well as bidding wars.”
YOY Increase: 23%
Blowing all the other cities out of the water is none other than Phoenix, which boasted a spectacular 23% one-year gain since February 2012.
Of course, Phoenix led the way in January as well with an even better 23.2% improvement. Its month-over-month jumps in prices have consistently been near the top of the list, too.
The main driver in this case is actually a bit different than in many other areas, though: population growth. According to AZCentral, “The Phoenix area is expected to grow by approximately 96,000 people a year for the next three decades.”