For Least Valuable U.S. Homes, Housing Crisis Recovery Lagging
Homes in the bottom third of the market lost 30 percent of their value during the housing bust–and have yet to regain it, said Zillow Inc., Seattle.
The company’s monthly Real Estate Market Report said while median home values reached new peaks in more than half of the nation’s largest housing markets, a closer look at which homes are regaining value reveals an uneven recovery.
Zillow said more than 50 percent of U.S. homes have reached or surpassed the value they reached during the housing boom period, but the types of homes recovering are not the same, particularly in the most populated places. In 24 of the nation’s largest 35 markets, the homes in the bottom third of the market are least likely to have recovered the value lost when the housing bubble burst.
Detroit, for example, has seen one of the least balanced recoveries following the Great Recession. Nearly two-thirds of the most expensive homes in Detroit have regained the value lost when the market collapsed. The typical top-tier home value in Detroit is $284,800, higher than it was during the housing bubble. In comparison, homes in the bottom third have only regained 33.7 percent of their lost value, and are now worth a median of $53,000. Only 10.6 percent of these homes have fully returned to their peak values.
“The housing market as a whole is moving at a steady clip, with high demand and low inventory combining to maintain strong home value appreciation,” said Zillow Chief Economist Svenja Gudell. “Most new construction has been at the higher end of the market, so demand for the limited supply of entry-level homes is pushing up their values, but these homes also lost more value when the bubble burst. Many of these homeowners are still waiting to see their homes come back to where they were about 10 years ago. Even as headline numbers show an overall recovery, there are still thousands of Americans struggling to bounce back from the housing bust.”
The report said national home values rose by 6.9 percent from a year ago to an average $201,900. Home values in Seattle, Tampa, Fla. and San Jose saw the strongest appreciation. Rents across the country rose by 1.9 percent year-over-year, to $1,430 per month, with rent in Sacramento, Calif. and Seattle appreciating the most.
Seattle is the only major U.S. market where home values rose at a double-digit annual pace, up 12.4 percent since last August to a median home value of $453,100. Tampa home values rose 9.3 percent, and the median home is worth $187,400.
Gudell said limited inventory leaves few options for buyers. Nationally there were 12.6 percent fewer homes available in August 2017 than there were a year ago. San Jose and San Diego saw the biggest annual declines in inventory, down 59.4 percent and 37.2 percent respectively.
