Residential investment and rising home prices are definitely a current trend, but how much investing and home buying occurs is highly contingent on the dynamics of the local economy, CoreLogic said in its latest MarketPulse Report.
The real estate data and research firm said residential investment is not occurring evenly throughout the country, but rather is concentrated in certain parts of the U.S.
When looking at price declines experienced from peak levels set prior to the downturn, the western region – including California, Nevada and Arizona – performed the worst with steeper price declines. The Mountain and Pacific regions alone saw 41% and 39% drops, respectively, from peak levels.
However, home prices in the West-South Central part of the U.S., including Texas, and the East-South Central Division fared the best after the real estate downturn. West-South Central states fell only 9% from peak prices, while the East-South Central Division, which includes Mississippi, fell 13% after reaching peak levels.
Real estate investment activity also seems to be market specific in many cases.
“Residential investment is not occurring evenly throughout the United States but is concentrated in geographies that are either recovering from the boom-bust cycle, or exhibiting strong economic fundamentals and strengthening demographic demand,” wrote Sam Khater and Mark Fleming with CoreLogic.
The good news is real estate is once again a significant contributor to economic growth. The researchers say the overall economic recovery has transitioned from an uptick in traditional business equipment and software investment to residential investment in recent months.