Home / Daily Dose / Inequality Marks Recovery; Home Prices to Stabilize
Print This Post Print This Post

Inequality Marks Recovery; Home Prices to Stabilize

The Demand Institute, a non-advocacy, non-profit think tank jointly operated by the Conference Board and Nielsen, released Wednesday a new report entitled: "A Tale of 2000 Cities: how the sharp contrast between successful and struggling communities is reshaping America."

The report "finds that a large proportion of housing wealth is concentrated in a relatively small proportion of America's cities, towns and villages."

An 18-month research program that included an analysis of 2,200 cities and towns and in-depth interviews with 10,000 consumers provided data for the report's conclusions.

The report's title is presumptively a reference to the Charles Dickens work, A Tale of Two Cities, which begins with the famous and seemingly contradictory phrase, "It was the best of times, it was the worst of times…"

The report seems to lend veracity to Dickens' opening remarks, noting that, "Of the 2,200 analyzed, the top 10 percent ranked by the aggregate value of their owner-occupied homes held 52 percent ($4.4 trillion) of the total housing wealth. The bottom 40 percent held just eight percent ($700 billion)."

50% of communities studied are struggling to move forward after the recession, according to the report.

"Housing is an important financial barometer for the larger U.S. economy, and a more nuanced social barometer for families and towns," said Kathy Bostjancic, director of macroeconomic analysis at The Demand Institute, and co-author of the report. "The housing trends analyzed in this report paint a powerful picture of how the Great Recession has impacted Americans in the short-term, and illuminate the potential long-term effect on our country."

The presence of double digit increases in home prices in the past two years are not indicative of future trends, according to the report. Rather, the upswing in prices was caused by investors buying up large tracts of distressed homes to meet rental demand.

Home prices are expected to grow at a rate of 2.1 percent between 2015 and 2018 as supply and demand meet at a sustained equilibrium.

The report comments, "Now, with prices firmer and the number of distressed or foreclosed properties down, the market is stabilizing. More homeowners are looking to sell than previously, so inventories will rise; that and the expected rise in mortgage rates and only tepid median household income gains will moderate future house price rises."

However, equality will not be evident across all 50 states: "There will be significant variations among all 50 states and the largest 50 metropolitan areas in the next five years. Price rises will be more than three times greater in the strongest markets than in the weakest ones."

By 2018, The Demand Institute projects that the national median price for a home will be close to reaching its 2006 peak. However, when adjusted for inflation, the median home price will stand 25 percent below its 2006 level.

About Author: Colin Robins

Colin Robins is the online editor for DSNews.com. He holds a Bachelor of Arts from Texas A&M University and a Master of Arts from the University of Texas, Dallas. Additionally, he contributes to the MReport, DS News' sister site.

Check Also

Flood Risk Becoming More Prominent Industry Concern?

Areas with a higher risk of flooding are seeing an increase in the rate of mortgage application denials and withdrawals, while risks associated with other climate events are having little impact on mortgage lending in those areas.