This year’s presidential election has renewed some of the oldest rhetoric found in the political playbook. Both parties continue to juke and throw talking points at each other in hopes of attracting votes and reaching the end zone this November. Considering the nation is still going through the worst economic downturn since the Great Depression, red and blue teams alike tend to ask or answer the question, “Are you better off now than you were four years ago?” However, how would a voter’s largest asset answer that question?
RealtyTrac, a California-based real estate research firm, recently conducted a study to find out if housing markets in the United States are better off now than four years ago. To little surprise, the majority of the country is in worse shape than in 2008, regarding the local housing conditions across hundreds of counties. In fact, RealtyTrac reports that the average home price decreased from four years ago in 72 percent of the 919 counties analyzed. Average sales prices were up in only 254 counties, with the average price of a residential property nationwide declining 20 percent over the past four years, making more than 12 million homeowners underwater on their property.
The study is troubling for the country’s 75 million homeowners, especially since a house is often considered the homeowner’s biggest asset, or in many cases, biggest liability. RealtyTrac also took a more broad view of the housing market by looking at five key related metrics, which include: Average home price, unemployment rate, foreclosure inventory, foreclosure starts and share of distressed sales. Foreclosure inventory and fewer foreclosure starts are seen in a positive light, but not enough to offset the negative impacts from the other three metrics. In the 919 counties with data available for all five metrics, 580 counties or 65 percent showed at least three out of the five metrics worse off than four years ago. Only 315 counties or 35 percent showed at least three of the five metrics in better shape over the same time period.
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“The U.S. housing market has shown strong signs of life in recent months, but many local markets continue to struggle with high levels of negative equity as the result of home prices that are well off their peaks. In addition, persistently high unemployment rates are hobbling a robust real estate recovery in most areas,” said Daren Blomquist, vice president at RealtyTrac. “While the worst of the foreclosure problem is in the rear-view mirror for a narrow majority of counties, others are still working through rising levels of foreclosure activity, inventory and distressed sales as they continue to clear the wreckage left behind by a bursting housing bubble.”
Among the five key metrics, the unemployment rate across the counties were the most concerning. A whopping 854 counties showed an increase in the unemployment rate when compared to four years ago, representing 94 percent of the total. Unemployment rates decreased in only 53 of the total counties analyzed.
Housing became a bubble that eventually popped. As many investors know, bubbles are not easily re-inflated. No matter which political cheerleader is elected, the housing market is likely to remain well below its peak seen in the glory days of the credit debacle for many years. In the meantime, investors will have to settle for homebuilder stocks that have made an unprecedented surge this year thanks to the Federal Reserve re-inflating equity prices. Shares of Lennar (NYSE:LEN) have jumped 90 percent this year, while Toll Brothers (NYSE:TOL) and DR Horton (NYSE:DHI) have both gained about 70 percent. KB Home (NYSE:KBH) and PulteGroup (NYSE:PHM) shares have more than doubled.
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