Subscribe

Home prices are pretty high. In some cities, they're really, really high.

Home prices nationally are well above those of the depths of the Great Recession, and slightly below their 2006 peak.

  • close
    Homes are seen for sale in the northwest area of Portland, Oregon. U.S. home prices are strong, indicating the housing market recovery remaines intact despite signs of a sharp moderation in economic growth in recent months.
    Steve Dipaola/Reuters/file
    View Caption
  • About video ads
    View Caption
of

Home prices are starting to reach pre-recession peaks, with Dallas, Denver, and Portland, Ore., reaching all-time highs.

According to Tuesday’s release of S&P/Case-Shiller data on US home values up to November 2015, home prices are 4.8 percent below their peak in July 2006, and nearly 30 percent above the depths of the Great Recession in January 2012.

“Home prices extended their gains, supported by continued low mortgage rates, tight supplies and an improving labor market,” says David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices, which tracks the performance of the financial markets.

The factors add up to a great market for home sellers, and not so great for home buyers, as a lower supply of homes is leading to higher prices, especially in cities such as San Francisco, Las Vegas, and Phoenix, where prices have appreciated by 74 percent, 60 percent, and 52 percent respectively from January 2012 to November 2015.

Home price appreciation since January 2012 trough (Source: S&P/Case-Shiller Home Price Indices S&P Dow Jones Indices

By comparison, as of Friday, the S&P 500 – an index of 500 large stocks that is widely seen as a good measure of the stock market – is up 46 percent from January 2012. This is better than national home price appreciation average, and about the same as Los Angeles.

Though mortgage rates are expected to stay well below the historic average of 6 percent, a boon for home buyers, wages would need to grow to make homes affordable to most Americans, as the Associated Press points out.

“The dearth of inventory has really taken its toll on the market,” Nela Richardson, chief economist at the Massachusetts real estate brokerage Redfin told the AP.

“Homebuyers this year are motivated but not desperate, and they refuse to overpay,” she said. “Without more listings what we’ll see are higher prices and lower sales volumes, a lousy way to start a new year for homebuyers.”

Cities such as Portland, San Francisco and Denver saw double-digit grown in home prices in November 2015 compared to November 2014. Portland’s home prices grew by 11.1 percent, San Francisco’s by 11 percent, and Denver’s by 10.9 percent, reports the S&P/Case-Shiller.

Phoenix is notable because November was the 12th consecutive month of home price increases in the city, with a 5.9 percent increase over November 2014. Detroit also saw progress with a 6.3 percent rise in prices in November 2015 over the previous year. The city also saw the largest annual increase in gains between October and November.

Overall, the housing market is doing well relative to other parts of the economy, the S&P points out. These include the oil and energy sectors, which have struggled with a 75 percent drop in oil prices in the last 18 months, and a strong US dollar, which is slowing exports.

Housing is probably one of the pockets of strength in the economy because employment is better, interest rates are lower and prices have come back,” Krishna Memani, chief investment officers at New York investment firm Oppenheimer Funds, told Bloomberg.

“If you talk to builders, there’s decent strength in the regular (non-luxury) US housing market. If that cracks, then we are going to have a significant problem,” he said.

Housing, as the S&P report points out, is not large enough to offset other weak spots in the economy.

About these ads
Sponsored Content by LockerDome
 
 
Make a Difference
Inspired? Here are some ways to make a difference on this issue.
FREE Newsletters
Get the Monitor stories you care about delivered to your inbox.
 

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK