DEARBORN — Home prices around the country experienced the highest increase, in nearly seven years, during the month of March.  In addition, consumer confidence was also at its highest, in five years, during the month of May.

The S&P/Case Shiller composite index, which monitors home prices in 20 metropolitan areas, climbed 10.9 percent this year, which was its biggest increase since April 2006. 

The housing market in Dearborn reflects the recovery on the national level, with home prices and demand on the rise to the point where it is hard to find a home for sale in the City.

Local mortgage broker Chuck Hage said that housing prices in Dearborn are the highest they have been since 2008, when the market “started going down a lot” due to a drastic increase of short sales and foreclosures. 

Hage said that the surge in prices will have multiple effects on buyers. For example, many buyers who would have qualified for a mortgage loan on a $120,000 house will not qualify for a loan on the same house when it is $150,000 now.

In addition, down- payments on houses will increase, because buyers are now paying a 20 percent higher price. The increase in prices will also impact interest rates on mortgages, making them higher, according to Hage. 

Although the price increase makes it more difficult to purchase a home, Hage says, “It’s a sign of improvement. It’s good for the economy, and it will benefit everybody in the end.”

The broker said that the federal government has played a major role in the recovery that we are witnessing today, by forcing banks to renegotiate and refinance mortgages with homeowners, thus preventing foreclosures and placing regulations that have helped decrease short sales.  

Hage said that when short sales were reduced, demand went up, and sellers could ask more for their homes. He added that the increased demand and decreased supply have caused prices to go up and have resulted in a shortage of homes that are available for sale in Dearborn.

Hage added that buying a house today is a good investment, because he expects home prices and interest rates to be up to 5 percent higher within six months.

A Reuter’s poll showed that the recovery in the housing market is likely to continue through the rest of the year, with economists reviewing their forecasts and increasing their expectations for price gains in 2013.

While the newly released data about increased home prices is a sign of economic improvement, Sam Bullard, senior economist at Wells Fargo in Charlotte, North Carolina, told Reuters that the housing market is performing better than the overall economy.

Bullard pointed to the effect of higher stock prices on consumers and the high demand for homes in damaged regions by investors, as individual reasons that are helping the housing market.