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Don’t Jump to Conclusions Quite Yet

recession-or-recoveryAccording to Harvard’s State of the Nation’s Housing [1], when home prices are adjusted for inflation, they are still 9 to 16 percent below peak, depending on the measure used. Harvard uses an interactive map to show price changes in 951 markets across the country in 2000 and since the areas mid-2000 peak. The map covers about 85 percent of the nation’s population in Metropolitan Statistical Areas and 31 Metropolitan Divisions. An additional 9 percent of the population was studied in the 549 smaller Micropolitan Statistical Areas.

There has been uneven growth over the U.S. with nominal home prices above their mid-2000s heights concentrated in the middle of the country, Pacific Northwest, and Texas. This accounts for 48 percent of all markets. In real dollars, prices reached their peaks in only 15 percent of all markets. Prices were above their peak in 10 percent of Metropolitan Statistical Areas and Metropolitan Divisions and topped their peak in 17 percent of the smaller micro areas. In one-third of all markets, real prices were still 20 percent below peak. This was seen in the places where the housing crisis was seen the most: Florida, large parts of the Southwest and Northeast, and parts of the Midwest.

The report said this uneven growth has led to increasing differences amongst housing costs with the 200 inflation-adjusted median home values in the 10 most expensive metros being $350,000. This is, on average, three times higher than the median value of homes in the 10 least expensive metros. When taking a look at the increase between January 2000 and December 2016, real home values in the top 10 rose 64 percent to about $574,000 while the least expensive were about $113,000. This is a rise of 64 percent and 3 percent respectively.

To view the full report, click here [2].