By one measure, the U.S. housing market turned a significant corner early this year: Prices are on the rise everywhere.
For the first time since the bottom fell out of residential real estate beginning in the summer of 2006, all the 20 major cities tracked by the closely watched S&P/Case Shiller Home Price Index rose on a year-over-year basis in January, data released on Tuesday showed.
That is a significant milestone for a property market recovery that has been characterized by inconsistent momentum and spotty regional performances. On average, U.S. homes lost more than a third of their value in the recession, according to Case Shiller data, but some areas lost more than half their value, while others barely registered double-digit declines.
After marking what turned out to be two false bottoms in early 2009 and 2011, the market turned the corner in early 2012, and a host of data, from increasing new and existing home sales volumes to a pickup in housing starts, suggest the recovery is strengthening.
“Definitely we’re seeing more evidence of a rebirth of the housing market,” index co-creater and Yale economics professor Robert Shiller told Reuters Insider. “The housing market is very different from the stock market. (Prices) have momentum and when they start going up, they generally keep going up for a year or even more.”
But the fact that it has taken nearly seven years for all 20 metropolitan areas to show improvement at once belies the fragmented nature of the comeback. For instance, Phoenix has outperformed whereas Chicago remains a laggard.
While it is a positive sign that the gains are widespread, “The housing recovery does remain a bit uneven,” said Stan Humphries, chief economist at Zillow.
“These appreciation rates we’re seeing are certainly not sustainable and I think are not good for the market in the long-term. We’re going to see a period of volatility in home price appreciation until we clear out the negative equity and until mortgage rates get back to more normal rates.”