Home prices stuck in a recession timewarp
Only a third of U. S. homes are back to pre- recession highs, one study reveals
What housing recovery? Only about one- third of U. S. homes have topped their pre- recession price peaks, undermining other measures that have shown average national housing prices zooming past those high- water marks, according to a new study by real estate research firm Trulia.
“The U. S. housing market hasn’t recovered,” says Ralph McLaughlin, Trulia’s chief economist. “When you actually look at the value of any individual house, you’re much more likely to find houses that haven’t reached their” previous highs.
Make no mistake — the housing market has clawed its way out of the depths of the mid- 2000s crash. The median U. S. home price was $ 196,500 in March, up from $ 151,900 at the market nadir in April 2012, Trulia figures show. And the vast majority of homes are worth more than what current owners paid for them.
Yet some homeowners may be waiting for prices to climb back to their previous tops before selling, which could be helping to constrain the number of homes available in the market, McLaughlin says. These unusually low inventories, in turn, are driving up prices, which ultimately could spur those homeowners to sell.
Trulia looked at the market value of each home and compared it with its prerecession peak. By contrast, S& P Dow Jones Indices and the Federal Housing Finance Agency calculate average price changes that givemore weight to expensive homes.
S& P found its index exceeded its July 2006 peak last November, and the finance agency’s measure reached the milestone a year earlier.
While Trulia’s study concludes that just 34.2% of homes nationally have surpassed their previous highs, some metro areas have recovered from the housing crash, particularly in the West and South. Many of these places have benefited from strong job, income or population growth, such as technology hubs Denver, San Francisco and Portland, Ore., each of which has seen more than 90% of homes exceed their pre- recession records. A low vacancy rate on homes for rent or sale also tends to push up prices sharply.
In Denver, the housing recovery leader with 98.7% of homes at new peaks, average income has increased 20% since the recession ended in 2009, the secondbiggest rise among the 100 largest metro areas. During this period, the city’s population has grown a healthy 13.7% and its median home price has soared 50% from its pre- meltdown record to $ 356,749 as of December.
“Most homeowners feel ( the price run- up) is a security blanket,” says Steve Danyliw, a Denver broker with Danyliw & Associates. Many, he says, are taking out home- equity loans to pay for expenses such as their children’s college education.