Have Home Prices Fully Recovered From the Recession?
A nationwide banking emergency that plunged the U.S. economy into the Great Recession, the subprime mortgage crisis sent home prices plummeting. Now, new data suggests this trend has made a complete reversal, with home values exceeding record highs.
Home Prices Soaring
According to data from the S&P CoreLogic Case-Shiller Indices, September housing prices saw an annual gain of 5.5 percent over the year. This gain eclipsed the peak set in July 2006, when the housing boom topped out. According to experts, the S&P’s figures don’t just signal that home values have recovered from the recession, they may point toward the start of a new advance. That said, increasing home prices have not been universal; and real estate prices in many parts of the U.S. remain well shy of where they were during the housing boom.
Why the Increase?
The jump in home prices has stemmed from tightening supply and increased buyer demand. Property prices have been supported by plummeting mortgage rates, which have fallen to three-year lows. In turn, buyer competition has intensified. According to an October report from Zillow, less than half of buyers are successfully obtaining a property on which they make an offer.
What it Means for Agents
According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), ever-rising home prices have squeezed housing affordability in the U.S. Still, firming job growth and low interest rates continue to fuel buyer activity in certain housing markets throughout the country.
The increased pool of buyers is good news for real estate agents in the West and South, where markets have reached their pre-recession peaks. On the other hand, because the housing market recovery has been very uneven across the U.S., many experts have called the index’s all-time high largely symbolic.
Despite positive trends in the national housing market, an agent’s individual success is still largely dependent on the local market in which he or she works. Still, as long as interest rates remain low and employment continues to improve, there’s a good chance market improvements will spread to other regions.
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