During the first quarter of 2018, 54% of U.S. metros posted median home prices that surpassed their pre-recession peaks, according to the Q1 2018 U.S. Home Sales Report from ATTOM Data Solutions, a national property database.
Median home prices in 57 out of the 105 metropolitan statistical areas analyzed by the report were above their pre-recession price peaks during the first quarter.
Nationwide, the median home price was $240,000 in the first quarter, just 1% below its pre-recession peak of $241,500 in the third quarter of 2005. This is up 9.1% from last year.
Metros with the highest increases from their pre-recession peaks included Houston, Texas, up 69%; Dallas-Fort Worth, Texas, up 67%; Denver, Colorado, up 62%; San Jose, California, up 60% and San Antonio, Texas, up 57%.
“Rising interest rates and recently enacted tax reform that removed some tax incentives for homeownership were not enough to cool off red-hot home price appreciation in many parts of the country, with 30 of the 105 local markets analyzed posting double-digit gains in median home prices in the first quarter,” ATTOM Senior Vice President Daren Blomquist said.
“Home prices are still below pre-recession peaks in 46% of local markets, but nearly one-third of even those markets posted double-digit home price appreciation in the first quarter,” Blomquist said.
But in some markets, home prices still remain far below their previous recession peaks, led by Bridgeport-Stamford-Norwalk, Connecticut, which was 25% below its previous peak; New Haven, Connecticut, down 22%; Allentown, Pennsylvania, down 21%; Philadelphia, Pennsylvania, down 20% and Hartford, Connecticut, down 19%.
And as far as changes from last year, San Jose, California, saw the highest increase at 33%, followed by Flint, Michigan, up 20%; Spokane, Washington, up 18%; Reno, Nevada, up 17% and Seattle, Washington, up 16%.
“In 2018 and in the next couple of years, we'll see more markets where home prices are entering boom territory,” said Ingo Winzer, Local Market Monitor founder and president. “It's strange to say after so many years of stagnation, but buyers will want to beware right now in Denver, Miami, the L.A. area, Austin, San Francisco, Tampa and Seattle, where home prices are already 25% higher than they should be.”
“We don't think a bust is imminent, in fact we think prices in these markets will keep going up for several years, but dynamics like this have always ended badly in the past,” Winzer said. “If you're thinking of selling, this year or next would be a good time. If you're thinking of buying, either have a very short-term outlook or a very long one.”
Homeowners who sold their home during the first quarter had been in their homes an average of eight years, down 2% from 8.14 years in the fourth quarter. This represents the highest quarterly drop in average homeownership tenure since the fourth quarter of 2008. However, it is still up from 7.69 years in the first quarter of 2017.
Perhaps due to this decrease in homeownership tenure, homeowners who sold their home in the first quarter realized an average home price gain since purchase of $53,369, down from an average gain of $54,000 in the fourth quarter but still up from an average gain of $45,000 in the first quarter of 2017.
The average home seller gain of $53,369 in Q1 2018 represented an average 29.5% return as a percentage of original purchase price, down from a 29.8% return in the previous quarter but still up from a 25.7% return in Q1 2017.