December 30, 2016 — Real estate in the last 15 years has been like an rollercoaster – cozy ups, terrifying downs, and hairpin turns. But like a great ‘coaster, the ride feels different depending on where you sit – those on the ends get the big thrills while middle riders enjoy a slightly smoother ride. That is the conclusion of The Wall St. Journal‘s recent analysis of the latest real estate prices from October’s S&P CoreLogic Case-Shiller National Home Price Index and other sources.
After dropping 27% from 2006 to 2012, average home prices rose 5.6% on the last 12 months, a record high (although not when counting inflation). But that is the national average, regional variations tell a significantly different story.
The Wall St. Journal reported that data from Weiss Analytics, a housing-data firm, indicates that zip codes where the median home was worth $500,000 to $1 million have dramatically outperformed less expensive markets – high prices areas are +103% vs. 16 years ago and +39% since the housing crash in 2006. Compare that to houses worth $100,000 to $150,000, which are only worth 16% more now than in 2000 and just 24% more than the most recent bust.
An Election Tale
The Journal also analyzed Zillow data. Using all these sources The Journal found a potential reason for soon to be President Trump’s election win. Urban coastal areas of the country (the end seats on the coaster if you will), which tended to vote for Clinton, have seen huge gains in the value of commercial real estate companies Denver since 2000 and since the real estate bust. By contrast the rural areas (the middle seats) that propelled the Trump victory are seeing real estate values that are essentially flat. Much of that difference comes from different economies – plenty of jobs and opportunities in the former and static to declining situations in the latter.
Topretirements can attest to the roller coaster changes in real estate prices since we started this site in 2006. At that time values were soaring with speculators buying multiple properties with the intent to flip. Prices changed faster than we could keep up. Then the market tanked and prices fell in some markets like Florida and Nevada to one third what they were prior to the crash. Since 2014 values have been soaring, there is more “flipping” going on, and it is hard to stay current with real estate prices in urban and coastal areas. Unfortunately, prices are changing very slowly in the hinterlands.
Here is the link to The Wall St. Journal article: “Housing Gains Highlight Economic Divide (might require paid subscription).
Comments? How have real estate values changed in the part of the country you live in – big changes or small? Do you think the market is about to top out again, or even go into speculative territory? Please share your experiences in the Comments section below.