The long-awaited housing price rebound is arriving. After eight years, more and more real estate markets are reaching or exceeding the prices they achieved at the peak of the housing boom in 2007.
For homeowners who have been frozen in place due to upside-down mortgages or excessive mortgage payoffs, surging home prices are restoring the equity they need to sell.
For buyers, rebounding prices demonstrate a trend of potential appreciation and security in years to come for those who buy now. For real estate and mortgage professionals, the return to strong and stable values presents opportunities to those who have up-to-date home pricing information, and a solid understanding of valuation trends in their markets.
The news is full of ”national” real estate price reports. Since there is no such thing as a national real estate market, these are no more than averages computed from local data and are virtually worthless when it comes to counseling a client or investor about local market trends.
With the latest data on a market’s rebound, real estate professionals can better predict trends, especially when supported by home-value comparisons, which provide consumers a more detailed view of the market.
Markets seeing slower rates of recovery offer better opportunities for buyers looking for affordable housing, and markets that are appreciating faster than average promise to be good investment opportunities for buyers ready to move now.
Finding good data on price trends at the local level is not always easy, which is why Homes.com began tracking price recovery trends in the nation’s 300 largest markets three years ago. For each of these markets, we calculate the rebound rate — the distance to go before reaching peak or the appreciation achieved beyond peak.
As of June 2015, a total of 142 markets, or 47% of the top 300, have achieved full pricing recovery. Among the top 100 markets, southern markets continue to dominate the recovery with 23 markets, while the Midwest ranks in second with 11 markets.
Our research has found the markets that suffered the most during the housing crash and lost the most value are also the last to recover. Of markets that lost between 10% and 20% of their value, the average rebound percentage right now is 101% of their peak prices. Of the severe price decline markets that lost more than 20%, the average rebound percentage is 84%.
Among the nation’s 100 largest markets, Dallas-Fort Worth-Arlington, TX; Denver-Aurora-Lakewood, CO; Austin-Round Rock, TX; Houston-The Woodlands-Sugar Land, TX and San Antonio-New Braunfels, TX are leading the recovery.
The slowest to recover are Las Vegas-Henderson-Paradise, NV; Stockton-Lodi, CA; Cape Coral-Fort Myers, FL; Palm Bay-Melbourne-Titusville, FL and Deltona-Daytona Beach-Ormond Beach, FL.
As of June, America’s real estate markets were just a month or two away from the halfway point in the recovery, according to the Homes.com Index.
We have been adding new markets to the list of those achieving full-price recovery at the rate of two or three each month.
Should the current trends continue through the late summer and fall, we’ll reach halfway by the end of the third quarter.
While the halfway milestone is an important national achievement, what’s more important is how the march to full recovery is playing out where people live and real estate professionals work.
Even based on optimistic forecasting, at least half of local markets are still short of their peaks, offering little solace to sellers in those markets.
Although sellers may need to hold on to their properties a little longer in recovering areas, at least they, and local real estate agents, will be armed with the knowledge that their rebound is on its way.