Total US housing value reaches $25.3T, finally recovering recession losses
- According to the Federal Reserve, the total value of U.S. homes in the fourth quarter of 2015 was $25.3 trillion, $450 billion more than in the third quarter and a level the market hasn't seen since 2006, before the housing crash and great recession.
- One of the reasons housing has been slow to recover, according to Yahoo Finance, is because tight lending standards, unemployment, crippling debt and credit scores dinged by foreclosures all contributed to reduced demand. In contrast, financial markets recovered their values in four years and are currently 23% higher than they were before the crash.
- Rising home values could be the answer to the market's problem of low inventory. If home values can rise high enough for homeowners to make money on a sale, this should increase the number of homes coming on line, creating a more stable housing market.
Although the market has regained the $7 trillion lost during the recession, average home prices are still 5% below their 2006 highs, and median household incomes are lower than they were in 2000, Yahoo Finance reported.
The Federal Reserve might be conservative in its valuations, however, because, according to a Zillow report, U.S. home values grew $1.1 trillion in 2015 to a total valuation of $28.5 trillion, approximately $3 trillion more than the Fed’s number.
One thing is for sure: Although average home prices still haven't reached their pre-recession levels, current prices are making it difficult to buy a home in some markets. This is driving millennials, famed urban renters, into the suburbs in search of purchase deals, and pushing hundreds of thousands of Californians out of the state in search of affordable homes. Homebuilders like Hovnanian have pulled out of high-priced markets like San Francisco.
In fact, land and housing costs have skyrocketed so much in the Bay area that there is talk of a new housing bubble on the verge of bursting. According to a report by Curbed, construction of new homes in the Bay area has lagged behind job growth, and the difference between home prices and income is growing bigger, setting up the whole market for another unsustainable bubble. According to Curbed, in 2015, the Bay Area added a whopping 64,000 new jobs but increased home inventory by only 5,000.
- Finance.Yahoo.com Housing wealth hits a new record high
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