Jpmor­gan sees home prices up 14%

The Pak Banker - - 6BUSINESS -

JPMor­gan Chase & Co. (JPM) more than dou­bled its forecast for U.S. home price gains in 2013 to 7 per­cent this week, and pre­dicts a more than 14 per­cent in­crease through 2015. Bank of Amer­ica Corp. (BAC) said last week prop­erty val­ues will jump 8 per­cent this year, up from a prior es­ti­mate of 4.7 per­cent in a report ti­tled “Some­one say house party?”

The two big­gest U.S. banks are pre­dict­ing an ac­cel­er­at­ing re­bound as home­buy­ers and in­vestors rush to ac­quire a dwin­dling sup­ply of prop­er­ties and the Fed­eral Re­serve pushes down bor­row­ing costs by buy­ing mort­gage bonds. That’s strength­en­ing the econ­omy and sus­tain­ing a rally in home­builder shares af­ter the stocks more than dou­bled since the end of 2011. The two big­gest U.S. banks are pre­dict­ing an ac­cel­er­at­ing re­bound as home­buy­ers and in­vestors rush to ac­quire a dwin­dling sup­ply of prop­er­ties and the Fed­eral Re­serve pushes down bor­row­ing costs by buy­ing mort­gage bonds. That’s strength­en­ing the econ­omy and sus­tain­ing a rally in home­builder shares af­ter the stocks more than dou­bled since the end of 2011.

“We still think we are in the early in­nings of a pro­longed re­cov­ery in hous­ing and the econ­omy,” said Sa­man­tha McLe­more, a money man­ager for Bill Miller’s $1.2 bil­lion Legg Ma­son Cap­i­tal Man­age­ment Op­por­tu­nity Trust, which has a range of hold­ings tied to a hous­ing re­bound and has gained 20 per­cent this year best­ing 99 per­cent of ri­vals. Home prices rose 6.8 per­cent in De­cem­ber from the year ear­lier, the big­gest gain since 2006, ac­cord­ing to the S&P/Case- Shiller home-price in­dex of 20 cities. The mea­sure is still 29 per­cent be­low the peak that year af­ter soar­ing home­owner de­faults helped trig­ger.

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