Many left out of hous­ing re­cov­ery, Tru­lia finds.

Many hous­ing val­ues are lower than be­fore the cri­sis, Tru­lia finds

The Washington Post Sunday - - BUSINESS - BY THOMAS HEATH thomas.heath@wash­post.com

So how is the U.S. hous­ing mar­ket do­ing? It de­pends upon whom you ask. A re­port last week from Tru­lia, the pop­u­lar real estate web­site, up­ends con­ven­tional wis­dom that the hous­ing mar­ket is back to where it was in the hal­cyon days of 2006 and 2007. Back then, and for a decade pre­ced­ing it, the hous­ing bub­ble was fu­eled by low mort­gage rates and re­laxed lend­ing cri­te­ria.

The Tru­lia re­port as­serts that vast swaths of the 120 mil­lion sin­gle-fam­ily homes across Amer­ica — or about two-thirds — are worth less than they were be­fore the 2008 fi­nan­cial cri­sis.

“Ev­ery­thing is not up,” said Ralph McLaugh­lin, the chief econ­o­mist at Tru­lia. “The places where home prices are up tend to be few and far be­tween. In only 37 ma­jor metropoli­tan ar­eas out of the top 100 has the share of homes re­cov­ered ex­ceeded 50 per­cent.”

McLaugh­lin said hous­ing prices in big metropoli­tan ar­eas with strong economies and lots of jobs — think San Fran­cisco, New York, Dal­las, Austin and Bos­ton — are healthy. Home prices in the na­tion’s eco­nomic soft spots — such as Up­state New York, much of ru­ral Amer­ica, the Rust Belt, Bal­ti­more and bub­ble cities such as Phoenix, Las Ve­gas and parts of Florida’s Gulf Coast — are wheez­ing.

Put sim­ply, Tru­lia says, the hous­ing mar­ket’s re­cov­ery has fol­lowed ge­og­ra­phy. Others paint a dif­fer­ent pic­ture. The S&P CoreLogic Case-Shiller In­dex and the Fed­eral Hous­ing Fi­nance Agency House Price In­dex in­di­cate that the mar­ket is back to its pre-bust lev­els.

“Over­all, var­i­ous dif­fer­ent price met­rics say we have sur­passed prior peak lev­els in home value,” said Lawrence Yun, chief econ­o­mist with the Na­tional As­so­ci­a­tion of Real­tors. “Peo­ple who had pur­chased dur­ing the peak years and went through the down­turn would now have fully re­cov­ered those val­ues.”

The big dif­fer­ence be­tween Tru­lia and the Real­tors is that Tru­lia mea­sures the value of homes based on its al­go­rithm it cre­ated to put a value on homes. The Real­tors’ prices are based on ac­tual sales.

Ac­cord­ing to a sur­vey sup­plied by the Real­tors, the me­dian price for a U.S. home sold in the fourth quar­ter of 2016 was $235,000, com­pared with $221,900 in 2006, which is con­sid­ered near the peak of the hous­ing bub­ble.

Many home prices can have es­ti­mates, but many be­lieve the best way to find a home’s value is to put it on the mar­ket and see what it brings.

McLaugh­lin said me­dian sale prices such as those used by the Real­tors as a gauge of mar­ket trends can be mis­lead­ing “be­cause the types of homes that sell at any given point can change. For ex­am­ple, one might think in­creas­ing me­dian sales price is a sign of a hot mar­ket, when in re­al­ity it’s per­fectly pos­si­ble that it’s just nicer, more ex­pen­sive homes that are sell­ing.”

Some econ­o­mists split the dif­fer­ence, ac­knowl­edg­ing that many com­mu­ni­ties have not caught up to the broader hous­ing uptick across the na­tion.

“There are still some home­own­ers who are un­der­wa­ter and have neg­a­tive eq­uity, but that num­ber is far, far less than what it was at the trough of the hous­ing cy­cle in 2010,” said Frank Nothaft, chief econ­o­mist of CoreLogic, a real estate tech­nol­ogy and data an­a­lyt­ics com­pany.

The dark­est days came in De­cem­ber of 2009, Nothaft said, when 12.2 mil­lion peo­ple with mort­gages owned homes that were worth less than what they paid. That is known in fi­nance par­lance as “un­der­wa­ter.”

As of De­cem­ber 2016, he said, the num­ber un­der­wa­ter is 3.2 mil­lion, or 6 per­cent of Amer­i­cans with home mort­gages.

“It’s dra­matic im­prove­ment, but 3 mil­lion home­own­ers are still un­der­wa­ter. That’s a lot,” he said. “Un­for­tu­nately, it’s con­cen­trated in the sand states of Ne­vada, Ari­zona and Florida. Even in mar­kets that seem to have peo­ple that have re­cov­ered really well, such as the Washington area, there are pock­ets and neigh­bor­hoods that have not yet re­cov­ered.”

MATT YORK/AS­SO­CI­ATED PRESS

TOP: A new home is un­der con­struc­tion in Phoenix. Tru­lia found that home prices are weak there, as well as in much of ru­ral Amer­ica, the Rust Belt and other places.

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