Home Price Trends–Recent and Since their Peak

November 8th, 2012 at 11:25 pm

I’m still cogitating on election outcomes and will have more to say soon, but for now, just a quick look at the slowly but I think surely recovering housing sector.

The two figures below convey a few important points.  First, home prices are rising steadily, about 5% over the past year, according to CoreLogic.  Second, both non-distressed and distressed sales have been rising (distressed sales are short sales and foreclosed properties; not shown in figure, but their yr/yr prices have been up each month since March, up 4.6%, Sept12/Sept11).  The distressed sales are still about 20% of the total so their positive movements are a big deal here.

Third, these prices are coming off a very low base.  The bar chart shows home price changes in various metro areas both from one year ago and from their peak.  In Phoenix, for example, single family home prices are up more than a fifth compared to a year ago, but remain about 43% below their 2006 peak.

So, yes, like much else in our economy, things are improving, but they’ve got a ways to go.  Of course, one essential caveat to that conclusion in the housing space: the peak was inflated by a massive and terribly destructive bubble, so getting back there is not, by any means, a goal.

Source: CoreLogic, economy.com

Source: CoreLogic

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4 comments in reply to "Home Price Trends–Recent and Since their Peak"

  1. mitakeet says:

    Is the housing price index marked properly? I would have assumed that once you remove the distressed prices from the total prices that the non-distressed house prices would be higher, rather than lower, as appears to be the case in your graph.

    • Jared Bernstein says:

      That would be true of the price levels but not their growth rates, shown here. This suggests distress sale prices rising more quickly that non-ditressed though, which is also probably not what you’d expect.

      • mitakeet says:

        OK, I missed the intent of the graph then. Actually, it jives better with my observation of distressed sales. I have been seeing lots of complaints about the ‘radical’ rise in prices for distressed properties with a lot of investors lamenting the days of the good deals are all behind them.

  2. rjs says:

    ive been down this road with you before, jared; there is no more real rebound in house prices now than there was under the homebuyer tax credit; it’s all driven by the Fed’s manipulation of interest rates…

    here’s freddies rates: http://www.freddiemac.com/pmms/pmms30.htm

    a 1% drop in rates at this level results in a 12.8% lower monthly payment on a 30 year mortgage…

    what happens to home prices if rates ever go up?