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Most markets now totally past recession effects

April 24, 2018

To one degree or another, home prices have been on the rise in nearly all major markets for some time. Today, much of the home value lost nationwide during the housing market meltdown has been recovered, to the point where more than half of all major metro areas now have higher median home prices than were seen prior to the economic downturn.

"The median home price of $240,000 is still slightly lower than the record peak."

Through the end of the first quarter, 57 of the nation's largest 105 housing markets have prices that surpassed the all-time highs seen before the downturn hit, according to the latest U.S. Home Sales Report. Overall, the national median home price of $240,000 is still slightly lower than the record peak, seen in the third quarter of 2005, but only by about $1,500, meaning that this level is likely to be surpassed in the very near future thanks to rapid home price appreciation.

A closer look
On an individual basis, however, there are many major cities where the median home price has not only surpassed its pre-recession highs, but did so some time ago and have long since obliterated that record, the report said. For instance, both Houston and Dallas-Fort Worth in Texas have cleared at least 67 percent of their previous peak values, while Denver and San Jose are both more than 60 percent higher than they once were.

Thanks to ever-growing demand among would-be buyers, these trends aren't likely to stop any time soon, either, the report said.

"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," said Daren Blomquist, senior vice president at ATTOM Data Solutions. "Home prices are still below pre-recession peaks in 46 percent of local markets, but nearly one-third of even those markets posted double-digit home price appreciation in the first quarter."

Issues for shoppers
Another potential hurdle for anyone trying to get into the market these days is that in today's conditions, the price of a home is now deeply unaffordable in comparison with historical norms, even after an adjustment for inflation, according to Student Loan Hero. In 1980, the typical home cost a little more than $47,000, or about $143,700 in today's dollars. In most major markets, that won't even come close to matching the cost of a property.

This also comes at a time when the cost of living for younger adults - who would most likely to be entering the housing market for the first time - is significantly higher than it once was, even before factoring in concerns about rising rents and other common expenses, the report said. Meanwhile, though incomes are up on an inflation-adjusted basis over that same period, they have not risen at a rate commensurate with other costs.

Meanwhile, mortgage rates are also likely to keep rising in the near future, putting further pressure on would-be buyers, according to CBS News. Rates have risen nearly half a percentage point since the start of 2018 and experts believe that trend, too, is only going to continue throughout the remainder of the year as the economy continues to improve.

With these conditions in mind, it's probably a good idea for anyone who is on the fence about getting into the market to do so sooner than later. As prices and rates rise simultaneously, waiting even a few months could lead to would-be borrowers paying thousands of dollars more over the lives of their loans than they otherwise would have.




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