Insight on the Great Housing Market Recovery

Published on Dec 01, 2016 | by TJC Real Estate


In case you have been living in a cave, you may be unaware that the U.S. housing market, as a whole, has made a full recovery from the the Great Recession (some sited sources say).  Home prices plunged 27.4 percent between July 2006 and early 2012 (causing nearly 9 million families to lose their homes) and now through consistent annual gains over the last 4 years, we are able to put to rest the worst period for the housing market since the 1930’s!  According to the Standard & Poor’s CoreLogic Case-Shiller home price index, home prices are currently positioned just above the peak of 2006. David Blitzer, managing director at S&P Dow Jones Indices, announced: “The new peak set by the S&P CoreLogic Case-Shiller national index will be seen as marking a shift from the housing recovery to the hoped-for start of a new advance.”

Markets in Seattle, Portland and Denver have seen some of the greatest annual gains while markets in Miami, Tampa Phoenix and Las Vegas still remain below the pre-housing bust peaks in lieu of large gains. We owe this recovery to the upturn in what seems to be a stable job market as well as record low mortgage rates. With these two factors on our side, more Americans are optimistic about purchasing a home.  Many new homeowners that timed the market well have been able to build thousands of dollars in equity during this crazy time of inflation.  Of course, there are challenges on the home front as well.  Bidding wars and prices increasing too quickly due to the prolonged period of historical low interest rates and limited inventory of have wreaked havoc on the purchasing side, especially those affordable enough for first-time homebuyers – which is even a bigger challenge. Zillow Chief economist, Svenja Gudell, states: “Inadequate supply of homes available to buy — especially at the entry-level end of the market — remains a huge problem.”  Unfortunately, since the housing bust recovery began in 2012, U.S. home price inflation has surpassed the rise of American household incomes.  This truly hinders those trying to enter the housing market for the first time.  According to S&P, since 2012, home prices have increased 5.9 percent annually though Americans’ post-tax incomes have only increased 1.3 percent.

The varying extent of growth between home prices and incomes has some economists surprised and even skeptical. “It’s not clear with the degree of [economic] growth that we’ve had that we should have expected prices to rise this much,” said Doug Duncan, chief economist at mortgage company Fannie Mae. “We have a caution light on.”

Are you ready to buy or sell?  Ready for an investment property?  Call one of your Neighborhood Realtors for complimentary consultation. 


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TJC Real Estate & Management Services • 303.324.6988 • info@tjcrealestate.com

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References:

http://www.wsj.com/articles/u-s-home-prices-set-a-record-in-september-case-shiller-says-1480428083

http://www.denverpost.com/2016/11/29/us-home-prices-surpass-pre-recession-peak/


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