Never was 'location, location, location' more important than in the current housing 'recovery'. From the Bay Area to Pittsburgh and from Denver to Oklahoma, the divergence in price movements is incredible. As the WSJ reports [7], while headlines gloat of several cities enjoying full-scale rebounds, these cities are largely exceptions with prices in many part of the US still well below the peak. In some 1,500 cities, values are still at least 25% lower than their previous highs. For the 'bubble' zip-sodes, "what you've got is something other than a sensible market-deciding price. You've got it goosed by the terms of finance, which are extraordinary," warns one realist realtor, "prices shouldn't be up this high, this quickly. It's a big, flapping yellow flag saying we're back in territory that we should not be in."
Massive divergence in price gains and losses from the 2008 peak...
[8]
Via WSJ, [7]
Home prices have zipped back into record territory in a handful of American cities, a milestone that comes seven years after the housing bust ravaged the market and the broader economy.
Values are up more than 13% from their 2007 high in Oklahoma City and by more than 6% in the Denver metro area. Prices are back to all-time highs in 10 of the nation's 50 largest metropolitan areas
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Home prices in some parts of the country that did experience a bust have benefited from low supplies of homes for sale and historically low interest rates that have boosted prices—and sparked concerns that prices could again be overvalued.
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But in those areas that did experience a downturn, he added, "I'm surprised that we are back to peak levels so quickly."
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Nearly 10% of municipalities have seen prices reach new highs this year when compared with their previous peak, and prices are within 5% of their previous highs in 300 more.
These cities are largely exceptions, and prices in many parts of the U.S. are still well below their peak. In some 1,500 cities, values are still at least 25% lower than their previous highs.
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The Zillow data also reveal the extreme variation—even within a particular metropolitan area—of the housing boom, bust and recovery. Prices are up 40% from their prior highs in Palo Alto, Calif., which is just 50 miles from San Pablo, a working-class suburb north of Oakland. Values there are still 54% below their peak.
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Some well-off communities in coastal California, Boston and Washington, D.C., which saw modest price declines during the bust, are rebounding quickly and reaching new highs because of supply shortages and better-than-average job growth.
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Some economists worry that home buyers along the coasts could again be looking at homes as investments rather than as places to live.
To the extent that gains aren't supported by rising rents or incomes, "you start to go, 'Geez, did people get a little too excited?' "
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"They say, 'This is crazy. This can't continue,'" she said. "The rest are like, 'Why didn't I buy in 2010 or 2011?' "
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"What you've got is something other than a sensible market-deciding price. You've got it goosed by the terms of finance, which are extraordinary," said Robert Albertson, chief strategist at Sandler O'Neill + Partners, an investment-banking firm in New York. "Prices shouldn't be up this high, this quickly. It's a big, flapping yellow flag saying we're back in territory that we should not be in."