In the depths of the housing meltdown, we plumbed many media outlets for the contrary opinion. That is, the opinion that offered a glimpse of hope. Back then, the contrary opinion was difficult to come by.

How times have changed. Month after month, the data show continued home-price improvement. CoreLogic added to the string this past week. Its data show home prices rose for a 12th consecutive month in February. Year over year, CoreLogic reports prices rose 10.2% to post the largest annual gain in seven years.

The strong run in home prices has us wondering if they are getting ahead of themselves. At the national level it appears unlikely. Another data provider, Clear Capital, expects prices will rise 2.6% for all of 2013. Such a modest advance arouses little concern; it barely exceeds the annual rate of consumer-price inflation.

That said, real estate markets are local markets. When thinking locally, there might be cause for concern. For example, certain markets in Arizona, where home prices have appreciated 18.6% statewide over the past year, and in California, where prices have appreciated 15.3% statewide, are likely approaching a point where buyers should proceed if not with caution at least with eyes wide open.

There are few mitigating factors. Affordability is one. Lender Processing Services estimates that home prices could jump as much as 35% without damaging affordability.

Mortgage rates are an obvious variable in the affordability calculus. Rates remain low, and likely will continue to remain low over the next couple weeks. Last week, we mentioned how events in Cyprus had investors scrambling to U.S. Treasury securities. Now that the Cyprus is yesterday's news, it appears events in Italy and Spain (centered on debt and bank capitalization) will keep money flowing into these haven securities.

So mortgages will likely remain near the current level, thus helping to keep home affordability high.

That said, FHA loans have become a little less affordable. On April 1, mortgage insurance premiums increased for the third time in two years. The increase is expected to raise average premiums by $130 per month.

On June 3, more changes are in store for MIP, which will further raise the cost of FHA loans for many borrowers. The point we want to emphasis is that potential borrowers interested in these traditionally low-cost loans would be well-advised to act sooner rather than later.

 Courtesy of Jessica Regan.

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