The great—and always quotable—late baseball legend Yogi Berra coined the phrase “it’s like déjà vu—all over again”.
With American housing prices reaching new heights, pricing levels not seen in a decade, housing industry experts are left to wonder if Berra’s axiom is proving to be true yet again.
The latest data, as reported by the S&P Dow Jones/Case-Shiller Indices, indicates that in September—the most recent month for which data is available—housing prices nationwide inched past their previous record high set in 2006; according to the index, the average home price in September rose 0.1 percent above the previous July 2006 peak.
The September numbers reflect a national trend of rising home prices that has been ongoing for some time; in fact, the nation has undergone 53 consecutive months of increasing home prices. According to the index, home prices rose 5.5 percent annually—and jumped by 5.1 percent between August and September.
Industry experts believe that there are numerous factors contributing to the significant hike in housing prices, most notably being continuing low mortgage rates and an ongoing shortage in supply of homes.
Some housing industry watchers find solace in those two facts, and point to those drivers of higher housing prices as being in stark contrast to the enormous amount of speculation that took place during the last housing bubble—and that helped to ultimately lead to the collapse of the nation’s housing sector.
As a result, there are some housing experts who believe that any future increase in the supply of available homes for sale (or resale) could help ease the ongoing escalation of housing prices.
Also tempering comparisons between the current housing boom and the previous one that resulted in the housing crisis of the last recession, is the fact that much of the current increase in housing prices has been geographical in nature; most of the increase in housing costs have been found in the Western United States, as well as in the South.
Interestingly, outside of those two regions, the only two cities that have recovered to pre-recessionary housing price levels are the ‘Rust Belt’ cities of Pittsburgh, PA and Buffalo, NY.
Still, in the nation’s Western half, the resurgence of the housing sector has had a dramatic impact on the price of housing—across numerous Western states and several cities.
For example, in September alone, the city of Seattle experienced an 11 percent year-over-year jump in housing prices; not far behind, in terms of housing price hikes, were the cities of Portland, Oregon with its 10.9 percent jump over the previous year’s home prices, followed by an 8.9 percent yearly hike in home costs in Denver.
And although there were 12 major US cities that reported significant price hikes in September from the previous month, that figure was somewhat counterbalanced by the fact that—allowing for inflation—overall national home prices remain about 20 percent below their very peak price levels.
Also working in consumers’ favor is the fact that household incomes have gone up by about 17 percent since 2006—the previous peak of US home prices; as a result, most experts agree that—overall, at least—homes can be said to be more ‘affordable’ than they were during the housing bubble of a decade ago.
With the arrival of a new year, and a new Administration in Washington–and interest rates on the rise–the future of the nation’s housing sector will continue to be one of much speculation over the course of the next 12 months.