Is Your Home Better Off Now Than Four Years Ago?

Source: http://www.flickr.com/photos/wwworks/

Source: http://www.flickr.com/photos/wwworks/

The real estate market is one of the most heavily debated areas of the economy. There has been a rebound in certain housing indicators since the depths of the credit meltdown, but the foundation was built on an unprecedented amount of intervention from the Federal Reserve and low inventory levels. Nonetheless, progress is being made, depending on your timeline.

A majority of the local housing markets are better off now than they were four years ago. According to an analysis of 410 counties in the United States by RealtyTrac, 96 percent of county housing markets are in better shape than they were when foreclosures peaked in 2010. In fact, 80 percent of the markets are better off than they were just two years ago when median home prices hit bottom. The analysis looked at four different key categories of housing market health: home price appreciation, affordability, percentage of bank-owned (REO) sales, and the unemployment rate.

“The housing recovery has taken root in hundreds of counties across the country and almost all local housing markets are better off than they were four years ago when foreclosure activity peaked in 2010, with more than 1 million homes lost to foreclosure in that year alone,” said Daren Blomquist, vice president at RealtyTrac, in the report. “We saw less than half that number of bank repossessions nationwide in 2013. Even in hard-hit markets like Stockton, Las Vegas, and Lansing, where REO sales represented more than half of all sales in 2010, the percentage of REO sales has been cut at least in half.”

However, people who purchased their homes shortly before financial chaos filled every headline are not feeling as optimistic. RealtyTrac found that only 30 percent of housing markets are better off than six years ago in 2008, while a mere 8 percent are improved from eight years ago in 2006.

“Home prices in three-fourths of the counties analyzed are still below 2006 levels, but low inventory has helped home prices accelerate past pre-recession levels in some markets like Seattle, San Francisco, Denver, and Oklahoma City,” Blomquist noted. “Those rapid home price gains are causing a concerning drop in affordability rates in some cities, but homebuilders and homeowners with regained equity should help provide more supply to balance out many of those markets in 2014.”

Affordability issues are already becoming well known in the market. In a separate report, RealtyTrac found that the estimated monthly house payment for a median-priced, three bedroom home purchased in the fourth-quarter of 2013 surged 21 percent to $865, compared to $714 a year earlier. Among the 15 most populated counties analyzed, the estimated monthly house payment jumped an average of 34 percent from a year ago.

While inventory levels should improve over the coming year, higher home prices and debt levels have caused many people to wait on the sidelines. First time buyers accounted for only 28 percent of existing-home sales last month, according to the National Association of Realtors. That is up from 26 percent in January but down from 30 percent a year earlier. January was the worst showing for first-time buyers since the NAR started keeping track of the measurement in October 2008. A normal reading would be closer to 40 percent.

“The biggest problems for first time buyers are tight credit and limited inventory in the lower price ranges,” said NAR President Steve Brown, in a press release. “However, 20 percent of buyers under the age of 33, the prime group of first-time buyers, delayed their purchase because of outstanding debt. In our recent consumer survey, 56 percent of younger buyers who took longer to save for a downpayment identified student debt as the biggest obstacle.”

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