The Alternate Housing Market Universe

Tech Sights BHIt has been determined by industry experts that if the housing market follows the same trajectory it is currently on, the median home price in the U.S. will be equal to that of prices before the housing crisis by 2017. A recent report from Zillow, though, cautions correlating prices returning to these levels with market recovery. The report states that instead of this milestone meaning recovery, it still means that home prices are well below what they would be if the housing bubble and crisis had never occurred but instead grown at historic norms.

Zillow says that for the typical home, the average worth is 4.9 percent less than in 2007, the point just before home values began to fall, and this is a vast improvement from the lowest point of the housing crisis when home values sat 22.4 percent from their peak. Additionally, it is noted that the 4.9 percent deficit is minuet in comparison to the more than 40 percent gain the stock market experienced over that same time frame.

Zillow cites that national housing market is really only a grouping of the hundreds of local markets meaning despite the average being 4.9 percent less than that in 2007, the actual home value averages hold a wide range of values from market-to-market. For example, the report describes that Denver home values have grown a whopping 45 percent, on average, since the housing bubble, but on the opposite end of the spectrum, the home values for Las Vegas are still significantly below that of their peak.

Despite these facts, the report says that the prolonged period of decline is often enough to keep home values below where they would have been if there had never been a housing bubble and subsequent collapse in the first place. To figure out how much of a difference this is, Zillow compared the actual change in home values between 2000 and 2016 to what they would have looked like if they had steadily grown at their historic rates.

Zillow calculated the average annual change for metro home values between 1985 and 1999 using the Federal Housing Finance Agency’s Home Price Index and then chained home values forward from 2000 onward using these rates of appreciation. When comparing this value to the current median home value it was found that instead of sitting at $187,000, the median home value would be approximately $235,000.

Likewise, Zillow found that 20 of the 30 largest metros analyzed show the same pattern as the nation; home values are currently below where they would have been if historic appreciation rates had persisted.

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One thought on “The Alternate Housing Market Universe

  1. Pingback: The Alternate Housing Market Universe — ksiconsultingco | ksiconsultingco

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