(Read More: When Banks Walk Away, Homeowners Don’t Always Win)

There are, however, still looming headwinds to home prices, as banks ramp up foreclosures especially in states that require these cases to go before a judge. That new inventory could slow price gains in those states. Inventory, or lack thereof, is the primary driver of much of these gains. There were just 2.03 million homes for sale in November, according to the National Association of Realtors, a 23 percent drop from November of 2011 and the lowest supply since September of 2005.

Some are concerned that low inventory and not increased demand is juicing prices faster than is healthy for the housing recovery. If prices start to outpace earnings and employment growth, and then more properties hit the market this Spring, these gains could take a U-turn.

(Read More: One Overlooked Fact About the Housing Recovery)

Article source: http://www.cnbc.com/id/100380754

San Francisco’s luxury homes are attracting eager buyers. 

Mark Calvey
Senior Reporter- San Francisco Business Times

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Don’t be surprised if you hear your real estate agent and mortgage lender suddenly belt out a rendition of “Happy Days are Here Again.”

Luxury home values in the Bay Area and other key California cities are chalking up their biggest gains since the housing boom went bust in the last decade.

Bay Area luxury home values soared 6.6 percent in the second quarter, the biggest year-over-year gain since the first quarter of 2006.

And Bay Area luxury home values rose 2.9 percent from the first quarter of 2012. The average luxury home in San Francisco is now $2.67 million, according to the First Republic Prestige Home Index produced by First Republic Bank and Fiserv CSW Inc. (NASDAQ: FISV)

“We have a hot market right now,” said Jay Costello, president of Hill Co. in San Francisco. “We’re going to see price increases over the next three to five years.”

Or at least until the Nasdaq makes a U-turn.

Real estate agents point to the strength of the stock market in driving Bay Area home prices since so many of the region’s affluent residents own stocks and options tied to publicly traded companies or private companies that will one day go public or be acquired, or so they hope.

The Nasdaq was approaching an 11-year high this week, thanks largely to shares of Apple (NASDAQ: AAPL) hitting a record high Monday on news of its patent-litigation victory against Samsung.

On the luxury home front, First Republic had more good news. California’s strengthening economy, which first emerged in the Bay Area, is now evident in luxury home values in Los Angeles and San Diego.

Los Angeles values increased 2.4 percent from a year ago and jumped 4.3 percent from this year’s first quarter, marking the biggest quarterly gain since the third quarter of 2005, when the national housing boom was in full swing. The average luxury home value in the L.A. area is now $2.04 million.

Mark Calvey covers banking and finance for the San Francisco Business Times.

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Article source: http://www.bizjournals.com/sanfrancisco/blog/2012/08/san-francisco-real-estate-home-prices.html