The CoreLogic Home Price Index, which is based on repeat sales, increased 7.5 percent in 2012, the largest increase since 2006! They also project 2013 home prices to rise 6 percent due to greater affordability fueling steady demand, a lower level of real estate-owned (REO) sales and a low inventory of unsold homes.

Additional key findings in the January report include:

Housing made an impressive recovery in 2012: Total homes sales increased 6 percent to 4.2 million, up from 3.9 million in 2011 – the first increase since 2005.

Non-distressed homes sales increased 11 percent to 3.2 million.

New sales increased 3 percent to nearly 300,000.

REO sales declined more than 20 percent to 600,000, the third annual consecutive decline.

Short sales rose 23 percent to 370,000 units, the highest level since the real estate downturn began.

Serious delinquencies declined by nearly 300,000 loans in 2012, which drove the seriously delinquent rate down to 6.9 percent, from 7.4 percent in 2011. Since the January 2010 peak, serious delinquencies have declined by 1 million loans.

The housing market enters 2013 poised for further recovery: Rising home prices will continue to slowly release pent-up supply as under-equitied borrowers are unlocked and opportunistic sellers begin to provide relief to tight inventories.

Short sales in recent months have overtaken sales of foreclosed homes in California for the first time since the housing market collapse of 2007, according to real estate research firm DataQuick.

The surge in short sales is partly the result of last year’s national mortgage settlement with the nation’s five largest lenders: Ally/GMAC; Bank of America; Citi; JPMorgan Chase; and Wells Fargo. The banks agreed to certain amounts of debt forgiveness for underwater homeowners. Short sales count toward those commitments.

If you are underwater in your home and considering the possibility of a short sale please contact a local Realtor educated and experienced with the process for a consultation.

Sheri Aguilar is the president of the Lodi Association of Realtors and can be reached at Sheri@YourLocalAOR.com