Markets that fell hardest during the housing crash five years ago today are racking up the biggest year over year gains as the prices in the nation as a whole through October exceeded analysts’ forecasts.
Housing markets that were on their knees just a year or so ago from foreclosures and low employment today are seeing prides rise much faster than cities that never felt the housing crash, according to the latest S&P/Case-Shiller Home Price Indices.
Median home prices rose 4.3 percent in the 12 months ending in October in the 20-City Composite, out-distancing analysts’ forecasts. Anticipated seasonal weakness appeared as twelve of the 20 cities and both Composites posted monthly declines in home prices in October.
The largest rebound is 24.2 percent in Detroit even though prices there are still about 20% lower than 12 years ago. San Francisco and Phoenix have also rebounded from recent lows by 22.5 percent and 22.1 percent with prices comfortably higher than 12 years ago. The smallest recoveries are in Boston and New York, two cities in the northeast which suffered smaller losses in the housing bust than the Sunbelt or California.
David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices, called the gains from the bottom markets an indication of the rebound is the underway. “Looking over this report, and considering other data on housing starts and sales, it is clear that the housing recovery is gathering strength. Higher year-over-year price gains plus strong performances in the southwest and California, regions that suffered during the housing bust, confirm that housing is now contributing to the economy. Last week’s final revision to third quarter GDP growth showed that housing represented 10% of the growth while accounting for less than 3% of GDP.