For many real estate agents, the recovery since the housing crisis has seemingly been moving at a snail’s pace. As it turns out, it may not be far from the truth.
According to a report by CNBC, a large portion of the U.S. housing market has not recovered from the crash a decade ago.
Trulia indicates that just a third of U.S. home values have surpassed their pre-recession peaks. Growth is slow enough in a number of markets, that data from Trulia also indicates it will be 8 years before it returns to pre-recession levels. Many of the sky-high values before the recession were the result of lending practices that are no longer in place.
Trulia also notes that increasing income among potential buyers drive home price growth. It considers four factors, including job growth, income growth, population growth and post-recession housing vacancy rates. Income growth showed the greatest correlation to home price growth. This may not be all bad according to Ralph McLaughlin, Trulia’s chief economist.
“Housing is what economists call a ‘normal good,’ so when incomes rise, households tend to spend more on housing, which pushes up prices.”
Job growth also spells opportunity for real estate agents. You know that this also leads to population growth, which drives demand for homes in your market. This can push prices higher. Limited supplies have created bubble-like prices in some markets. McLaughlin points out this is a factor, but just for certain price levels and in certain markets.
“In essence, income growth led home value recovery coming out of the recession, but low inventory is now increasingly playing a role in recent price appreciation across the largest U.S. housing markets.”
Proof of the slow recovery can be found in Maine, which has been slow to recover from the 2008 housing crisis compared to other states, with foreclosure activity still higher than pre-recession levels.
According to the Portland Press Herald, there were 3,779 Maine properties in 2016 with at least one foreclosure filing. This figure is down 37 percent from the state’s peak foreclosure year of 2013, when 6,037 properties in Maine had at least one foreclosure filing. Before the housing crisis, that figure was at just 50, according to Attom Data and RealtyTrac.
While the pace of the recovery may not be what many agents would like, one industry leader sees it lasting for a while. TRI Pointe’s Doug Bauer offered his perspective recently.
“We look at housing as a demographic, household formation, family formation engine, and compare this time to what we saw occurring during the 1991 to 2006 period. Considering the pent-up demand that’s there, I think [the recovery’s] got a good 10 years to go. If you look at that 15-year period from 1991 to 2006, it’s not as if there weren’t some bumps. But I don’t think we’re going to get ‘the big dipper.'”