February saw house prices soar 10.2%, the biggest monthly jump since March 2006.
There's no doubt that real estate market is experiencing recovery, but the question many analysts are making is what is behind this sudden, accelerated boost.
For the records, although demand has soared, banks are not handing out mortgages at a high enough rates to support this climb.
Capital Wave Strategist Shah Gilani explains what was behind this major housing market change.
"Where there's smoke there's fire," Gilani said in a interview to MoneyMorning.com.
When it comes to rising home prices, the question is whether the on-fire price increases are a healthy sign of a housing recovery or a smoke screen masking another investor-led real estate bubble.
"The answer is it's both," he said.
So, the real question is: are the two compatible and is the trend sustainable.
The answer to that compound question is "yes" and "no," in that order.
On the surface, everything is coming up roses.
According to closely followed real estate data provider CoreLogic, U.S. home prices jumped in February by the largest amount in seven years. They rose 10.2% compared to a year ago, and were up 0.5% from January to February.
The S&P Case Shiller index of prices in the nation's 20 largest housing markets notched an 8.1% rise in January. That's the biggest year over year gain since the peak of the market in June 2006.
Home prices have now increased for 12 straight months and in 47 out of 50 states.
The biggest gains have been in some of the previously hardest hit markets. Nevada had a 19.3% gain, Arizona an 18.6% gain, and California a 15.3% gain, in just the last year.
But, a look under the surface reveals there's more than one way to gauge these growth roots.
Price increases have been across the huge inventory of existing homes, mostly those in foreclosure and in other "distressed" circumstances, not new homes.
Conversely, new home prices averaged $246,800 in January. That's up only 3% from a year ago. And sales of new homes in February were down 5% from January, though they are up 12% from a year ago.
That means investors are behind the rapidly rising prices for pre-owned homes, not traditional "owner-occupied" buyers.
But they're not your average investors. They are big institutional buyers.
In fact, private equity alternative investment firm Blackstone Group LP is now the nation's largest owner of single-family homes. Founding partner Stephen Schwarzman recently said the firm is spending $100 million a week buying homes.
Last year Blackstone raised $13.3 billion in a new fund, with much of that money targeting home purchases. To date, Blackstone has already spent over $3.5 billion and owns more than 16,000 single-family homes.
