For all the talk of post-recession recovery, rising prices, and a brisk sellers’ market, barely a third of homes in the U.S. have values surpassing their pre-crash peaks. But even that recovery is far from even, according to a report released by Trulia Wednesday morning.
Trulia’s chief economist, Ralph McLaughlin, wrote that only 34.2 percent of homes nationally have seen their values surpass 2006 numbers. But that percentage belies wildly uneven pockets of recovery. Of large U.S. metros, some, such as Denver, San Francisco, Honolulu, and Dallas, have seen more than 90 percent of homes recover fully and surpass 2006 peaks. But then there are metros like Las Vegas and Tucson, where fewer than 3 percent of homes have passed pre-recession numbers.
Recovery hit its post-recession nadir in 2012, when that April just 7 percent of homes were worth more than they were half a decade earlier. Since then, McLaughlin wrote, “the recovery has been slow and steady, climbing by about 5 to 6 percentage points each year. At this rate, we won’t see 100 percent of homes reach their pre-recession peak until approximately September 2025.”
According to Trulia, many of the metros that have recovered well were in the West, South, and Midwest, where the housing crash had less impact on values to begin with. Metros like Nashville, Fort Worth, Wichita, Tulsa, and Colorado Springs survived the recession fairly well overall. The markets that took the hardest hits in the recession, such as those in Florida, in Rust Belt metros like Camden, N.J., or New Haven, Conn., and in some California cities like Bakersfield and Fresno, have shown very little recovery five years later.
McLaughlin said that what’s driving recovery in some areas and barely at all in others is a combination of income growth, population growth, and vacancy rates.
“A 1-point increase in income growth across metros is correlated with a 3.5-point increase in the share of homes that have recovered, while a 1-point increase in population growth and the vacancy rate is correlated with a 2.8-point increase and a 1.7-point decrease in the share of homes that have recovered, respectively,” McLaughlin wrote. “When incomes rise, households tend to spend more on housing, which pushes up prices.”
Meanwhile, he said, job growth isn’t correlated at all with home price recovery. But, “while job growth isn’t directly correlated with home value recovery, there is a direct relationship between job growth and income growth, the latter of which is strongly correlated with home value recovery,” he said.