The tale of home price recovery in the United States is reminiscent of the tortoise and the hare, and it’s all about how the story is told, says real estate data provider Clear Capital in its latest Home Data Index Market Report, with data through December 2013.
While 2013 saw “undeniable” recovery at a national level, with a total 11.3% gain in home prices, certain metro markets logged very disparate numbers. The home price recovery looks very different depending on how—and where—it’s told, Clear Capital says.
Clear Capital projects 2013’s 11.3% growth to taper to a 3.4% growth in 2014. And as the “hare” markets slow down to a growth of about 2.4%, compared to 14.6% last year, the “tortoises” will start to catch up with an expected 2.6% growth.
Between 2002 and 2006, 34 of the 50 largest metro markets accumulated an average 77% growth, with prices dropping an average 51% after the bubble burst.
However, sixteen of the largest 50 major metro markets maintained “slow and steady” growth throughout the run-up years to the housing crash, cumulatively growing an average 10.2%—far below the hares’ average growth, and the national average of 46.2%. In those “tortoise” markets, though, home prices fell only 36.1% peak to trough.
Take Denver and Phoenix, for example, which Clear Capital calls the “classic story of the tortoise and the hare.” While home prices are up 56.4% from market lows, it’s still almost 40% beneath peak prices. In contrast, Denver—considered a tortoise—saw the lowest growth between 2002-2006, at 2.2%, compared to Phoenix’s 98.5%.
Throughout the housing market crash, decline, and eventual recovery, Denver held steady, with a 22.4% peak-to-trough decline. Denver home prices are nearly 29% above their trough in 2008 and are 2.8% above mid-2006 levels, says Clear Capital.
While a home bought in Phoenix in mid-2006 for $200,000 is now valued around $120,000, that home would be worth around $206,000 in Denver—one of the only markets to have current prices higher than 2006 levels, according to the report.
“While the race continues, expect to see new markets take the lead as those that have come to define the recovery taper off to their long-run historical rates of growth,” says the report. “Looking ahead to 2014, we see many markets moving toward the slow and steady path. As markets adjust to their recent price gains, we expect moderation to unfold.”
Access the full Market Report.
Written by Alyssa Gerace