How is the housing recovery progressing in your area?
Where is the housing recovery? It is possible that by 2018, the median price of residential single-family homes will be close to the peak that was reached in 2006. As many are aware, the national housing market imploded under the weight of some questionable accounting and lending dynamics at that time. While it is likely that the market will move upward, there will be winners and losers.
Among the 50 largest metropolitan areas where housing prices are expected to appreciate between 2012 and 2018, Memphis, Tampa, Jacksonville, Milwaukee and St. Louis (top five) will see rises on average of 32 percent, while Washington, D.C., Oklahoma City, Denver, Minneapolis and Phoenix (bottom five) will average gains of only 11 percent. That is quite a disparity.
Louise Keely, chief research officer at the Demand Institute and co-author of the report stated the following, “The strength of the local housing market is among the most telling metrics that helps us assess community health and well-being”.
The five states likely to see the strongest gains in median prices are New Mexico, Mississippi, Maine, Illinois and New Hampshire.
The five states likely to see the lowest gains are Minnesota, Virginia, New York and Alaska and Washington, D.C., I know, not a state but included on the 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.
The study discovered that housing markets that experienced the biggest run up in prices during the bubble – and also the deepest drops – have a much longer road ahead to regain their prior pricing peaks.
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 valley.
The study also 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. It sees prices growing at an annual rate of 2.1 percent between 2015 and 2018, as supply and demand begin to even out.
The study said 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.
In contrast, it predicted that the main driver of demand in the next five years will be the formation of new households. This could be a boon in jobs For berks County where home building has been greatly suppressed over the last 7 years. This is an area where our local legislators need to consider tax abatement’s or other like kind considerations to fuel the home building fire.
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.
Let’s hope that Berks County and Reading, PA are on the good side of this recovery curve. It is more likely to happen if our legislators can get property taxes under control and influence new businesses to come to our area.
Berks County and Reading, PA get passed over by new businesses and end up in places like Lancaster and Allentown. Our leaders need to consider incentives to get the job providers to see our area for what it is. A place with great communities, hardworking families and great schools!