U.S. home prices surge 5.7% in Jan­uary on tight sup­ply

Buy­ers con­tinue to take ad­van­tage of low mort­gage rates.

Austin American-Statesman - - BUSINESS -

U.S. home prices jumped in Jan­uary from a year ear­lier at the fastest pace in nearly 2½ years, as a tight sup­ply of houses for sale spurred bid­ding wars in many cities.

The Stan­dard & Poor’s CoreLogic Case-Shiller 20-city home price in­dex, re­leased Tuesday, in­creased 5.7 per­cent in Jan­uary, the most since July 2014.

Amer­i­cans stepped up home­buy­ing in Jan­uary, even as mort­gage rates rose. Many buy­ers likely sought to close their deals be­fore rates in­creased fur­ther.

The Fed­eral Re­serve im­ple­mented its third in­ter­est rate hike in two years March 15, but econ­o­mists at S&P Dow Jones In­dices say higher rates won’t slow sales un­til later this year.

The big­gest price gains were in Seat­tle, Port­land and Den­ver, which have topped the other cities in the in­dex for months.

Mark Flem­ing, chief econ­o­mist at First Amer­i­can, said that still-low mort­gage rates and steady hir­ing will likely sup­port fur­ther hous­ing de­mand.

“Low mort­gage rates and eco­nomic growth set against a low in­ven­tory of homes for sale will drive a strong sell­ers’ market and fur­ther ris­ing prices this spring,” Flem­ing said.

David Blitzer, chair­man of the S&P Dow Jones In­dex Com­mit­tee, said that the Fed’s most re­cent in­crease won’t push up mort­gage rates very much and shouldn’t af­fect sales.

Av­er­age 30-year mort­gage rates typ­i­cally track the yield on the 10-year Trea­sury note. That yield is usu­ally driven by sev­eral fac­tors, in­clud­ing broader eco­nomic con­di­tions and in­vestor de­mand for safe as­sets such as Trea­surys.

Still, should the Fed raise rates three or four more times this year, “ris­ing mort­gage rates could be­come a con­cern,” Blitzer said. Fed of­fi­cials cur­rently fore­cast two ad­di­tional hikes.

Ro­bust price gains could even­tu­ally make hous­ing less af­ford­able, Blitzer said. That may al­ready be dis­cour­ag­ing some home­own­ers from “trad­ing up” to a new home, mak­ing the sup­ply crunch worse as fewer peo­ple put their homes up for sale.

“At some point, this process will force prices to level off and de­cline — how­ever we don’t ap­pear to be there yet,” Blitzer said.

There were just 1.75 mil­lion homes listed for sale in Fe­bru­ary, 6.4 per­cent lower than a year ago, near the low­est level since the Na­tional As­so­ci­a­tion of Real­tors be­gan track­ing the data in 1999.

Timed to air first dur­ing the Dell Match Play golf tour­na­ment in Austin last week, the TV ad starts out with a magic show on stage, with ac­tor Jef­frey Wright ex­plain­ing that what seems like magic is ac­tu­ally just the trans­for­ma­tive power of tech­nol­ogy, which is de­vel­oped by real peo­ple at Dell Tech­nolo­gies.

Part of the ad’s pur­pose is to unify all the dif­fer­ent com­pa­nies Dell pur­chased as part of the EMC deal un­der one brand. Or, as Wright in­tones dur­ing the ad: “In­tro­duc­ing Dell Tech­nolo­gies. Seven tech­nol­ogy lead­ers now work­ing to­gether un­der one name.”

But the ad also high­lights how Dell’s tech­nol­ogy can help in­dus­tries, from agri­cul­ture to health care. Yes, Dell still makes per­sonal com­put­ers. But now Dell is much more of a business-to-business com­pany, fo­cused on sell­ing IT hard­ware (and some soft­ware) to busi­nesses and gov­ern­ments.

”We’re try­ing to reach the business de­ci­sion-mak­ers, the CIOs, the very se­nior IT de­ci­sion-mak­ers,” Matthews said. “Many peo­ple know Dell, but they don’t know Dell Tech­nolo­gies.”

The goal isn’t nec­es­sar­ily to sell more IT equip­ment, but to “drive aware­ness of Dell Tech­nolo­gies as this um­brella brand,” Matthews ex­plained.

This is hardly the first time Dell Tech­nolo­gies has tried to show­case its IT so­lu­tions to busi­nesses, but it is the first time it has done so un­der a new name. Dell Tech­nolo­gies is still run­ning sep­a­rate TV ads for its per­sonal com­puter prod­ucts un­der the “Dell” name.

Dell has come a long way in its mar­ket­ing ef­forts from the fa­mous “Dell Dude” years. This pop­u­lar cam­paign started in 2000 and ran for three years. The first ad fea­tured a goofy kid named Steve who wanted a Dell com­puter for Christ­mas.

Matthews said the com­pany’s mar­ket­ing ef­forts shifted fo­cus in the mid 2000s as its business be­gan to change, swerv­ing into other hard­ware and soft­ware so­lu­tions for busi­nesses, such as servers and stor­age.

She said 2009 was the first year Dell “re­ally made a very con­certed ef­fort to unify the Dell brand,” launch­ing cam­paigns that at­tempted to tie to­gether Dell’s ef­forts to help con­sumers and busi­nesses.

“This cam­paign will do a lot to solve their prob­lems if they want to get to business peo­ple to know who they are,” said Terry He­meyer, who teaches com­mu­ni­ca­tions strate­gies at the Univer­sity of Texas at Austin.

But he warned that it won’t be easy for Dell Tech­nolo­gies to fa­mil­iar­ize cus­tomers with the new brand.

“It’s go­ing to be tough to do be­cause it’s been en­sconced for years (as Dell),” he said.

RICHARD VO­GEL / AS­SO­CI­ATED PRESS 2015

U.S. home prices jumped in Jan­uary from a year ear­lier at the fastest pace in nearly 21/2 years, as a tight sup­ply of houses for sale spurred bid­ding wars in many cities. The Stan­dard & Poor’s CoreLogic Case-Shiller 20-city home price in­dex, re­leased Tuesday, in­creased 5.7 per­cent in Jan­uary, the most since July 2014. The big­gest price gains were in Seat­tle, Port­land and Den­ver.

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