What now, shut down the blog? From the WSJ:
U.S. home prices have climbed back above the record reached more than a decade ago, bringing to a close the worst period for the housing market since the Great Depression and stoking optimism for a more sustainable expansion.
The average home price for September was 0.1% above the July 2006 peak, according to the S&P CoreLogic Case-Shiller U.S. National Home Price index released Tuesday. As of the previous month’s reading of the Case-Shiller index, a widely used benchmark for U.S. housing, prices remained 0.1% below the July 2006 record.
Adjusted for inflation, the index still is about 16% below the 2006 high. Home prices jumped 5.5% over the past year.
The record caps a four-year recovery from the trough of 2012, when prices sat 27% below the peak after a crash that caused more than nine million American families to lose their homes.
“It’s good news for homeowners out there, especially ones who were able to cling on to their homes,” said Svenja Gudell, chief economist at Zillow, a real-estate research firm. “They saw one of the biggest assets that they had lose a ton of savings.”
While prices have recovered, the market is flashing caution signs. The country is building far fewer homes than normal, the homeownership rate is near a five-decade low, and mortgages remain difficult to come by, especially for less-affluent buyers. Rising mortgage rates could also begin to pose headwinds to further price growth.
Home-price growth has also outpaced income gains, making it more likely that the current rate of appreciation is unsustainable. Home prices have grown at an inflation-adjusted annual rate of 5.9% since 2012, while incomes have grown by just 1.3%, according to Case-Shiller. By contrast, from 1975 until the present, prices grew at a rate of 1.1% a year, while per-capita incomes grew 1.9%.
Still, while housing has lagged behind some sectors of the economy in recent years, there are signs of gaining strength: Single-family housing starts rose 11% in October, according to the Commerce Department, and the number of starts remains well below the historical average, suggesting there is room for acceleration.
Likewise, the share of first-time buyers rose to 33% in October from 31% a year earlier, inching closer to the historical average of 40%. The lack of first-time buyers had been a drag on the market.
Robert Shiller, an economist at Yale University who co-developed the index, said the record provides a significant psychological boost for homeowners, some of whom are finally seeing their homes above water after four years of recovery. About 12% of homeowners who have a mortgage now owe more than their home is worth, down from more than 30% at the bottom of the market, according to Zillow.