U.S. housing recovery uneven across markets, study finds

WASHINGTON Wed Feb 26, 2014 12:01am EST

Carpenter's work on a housing site at Mid-Atlantic Builders ''The Villages of Savannah'' development in Brandywine, Maryland May 31, 2013. REUTERS/Gary Cameron

Carpenter's work on a housing site at Mid-Atlantic Builders ''The Villages of Savannah'' development in Brandywine, Maryland May 31, 2013.

Credit: Reuters/Gary Cameron

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WASHINGTON (Reuters) - The U.S. housing sector is likely to experience an uneven recovery over the next five years, with some local markets bouncing back faster than others, according to a study released on Wednesday.

By 2018, the median price of single-family homes will be close to the peak reached in 2006 before the national market cratered, according to the study from the Demand Institute, a nonprofit think tank operated by The Conference Board and Nielsen. But there will be winners and losers.

Among the 50 largest metropolitan areas where housing prices are expected to appreciate between 2012 and 2018, the top five will see rises on average of 32 percent, while the bottom five will average gains of only 11 percent.

The cities expected to report the largest increase in the median price of a previously owned single-family homes are Memphis, Tampa, Jacksonville, Milwaukee and St. Louis.

Those with the lowest projected price appreciation are Washington, D.C., Oklahoma City, Denver, Minneapolis and Phoenix.

"The strength of the local housing market is among the most telling metrics that helps us assess community health and well-being," said Louise Keely, chief research officer at the Demand Institute and co-author of the report.

As for states, the five likely to see the strongest gains in median prices are New Mexico, Mississippi, Maine, Illinois and New Hampshire.

Those with the lowest are Minnesota, Virginia, New York and Alaska. The study includes Washington, D.C., on its list.

The report is based on an 18-month research program that included an analysis of 2,200 cities and towns in the United States and interviews with 10,000 consumers.

Markets that experienced the biggest run up in prices during the bubble - and subsequently the deepest drops - have a much longer road ahead to regain their prior peaks, the study found.

For instance, in Nevada, prices will likely be 45 percent below their 2006 peak by 2018, in line with their 2002 level, the study said. Nevada was among the states that experienced the largest price appreciations during the boom and the hardest fall. Property values plunged 60 percent from peak to trough.

The study predicted that the national median price for an existing single-family home will rise at a much slower rate in the coming years than in 2013, when prices advanced 11.5 percent. The study sees prices growing at an annual rate of 2.1 percent between 2015 and 2018, as supply and demand begin to even out.

The double-digit price increases of the past two years are not indicative of future trends since they were largely driven by investors snapping up distressed homes to meet surging rental demand, the study said.

In contrast, it predicted that the main driver of demand in the next five years will be the formation of new households.

As the U.S. economy strengthens and employment rises, potential buyers will find entry into the market is easier.

Still, it is unlikely that everyone who dreams of owning a home will be able to make it a reality. In the next five years, the group predicted about 4 million households will fail to realize their current purchasing or even rental aspirations.

(Editing by Jan Paschal)

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Comments (1)
SimpleandSold wrote:
What do real estate commissions have to do with the housing recovery?

The answer is, everything. The commissions paid to real estate agents may not have caused the housing crisis, but it’s what’s keeping us entrenched in a lackluster market. Why? Because

Americans have learned to equate home ownership with risk and depreciation.

Look at the facts:
1.) According to the National Association of Realtors- Americans do not have
5-8% equity until 8-10 years.
2.) A Georgia Institute of Technology study showed that, if a home loses 4% of its value, it takes anywhere from 2-5 years for the homeowner to recoup that amount. Commission.
3.) According to 2 independent studies Stanford and Northwestern, homes sold without an agent resulted in 4-7% higher sales on average

The typical 6% commission is a hefty chunk of change for the home seller in a struggling economy coming off of a recession and who is competing with an overabundance of underpriced foreclosures. They realize handing a real estate agent $6000 for every 100K your house is worth out of their equity is ridicules when most if the work is done the Internet. There are still some 10.8 million homeowners with mortgages that are underwater—a figure that represents 39.2 % of homeowners with a mortgage, according to a research report by the online real estate marketplace giant Zillow in the third quarter of 2013.

Many homeowners have found alternatives. The changes started with flat fee firms were the homeowner does the work and rebate firms like Redfin, an online brokerage company, both have captured a significant share of the real estate brokerage business. Many of these options allow buyers and sellers to deal direct. Consumers don’t need a real estate license or computer science degree to search home values. The answer is on their Mac computer or Android phone, and they get an unbiased sense of what a house is worth. Transparency! Big Paradigm Shift in how homes are being bought and sold. This will be a huge step to stabilizing the housing market.

Feb 26, 2014 8:54am EST  --  Report as abuse
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