As we’ve noted time and time again, the fact that average national housing prices appear to have recovered from the peak of the housing bubble masks the uneven nature of America’s economic recovery: While certain popular coastal markets have seen prices recover, much of the south and Midwest have struggled with stagnation or even home-price deflation.
Now, a new tabulation of home-price data by Harvard University's Joint Center for Housing Studies provides a granular look at the unevenness of the recovery from county to county. A quick glance at the map reveals how home-prices – a worthy proxy for wealth inequality – have risen dramatically along the coasts, while
The data show that home prices increased by 40 percent or more in 153 metros (16 percent), including twelve metros where home prices doubled. And in nearly 300 markets, prices increased - but more modestly—by less than 20 percent. Meanwhile, real prices declined in about 280 metros. In another 200 markets, prices increased by 20-to-39 percent.
San Francisco, Nashville and Pittsburgh are among the 15 percent of housing markets around the country where prices have actually risen above their prior peaks in the mid-2000s after adjusting for inflation. Less fortunate are Cleveland, Phoenix and much of Florida, where prices are still at least 26 percent below where they were before the bubble burst.
However, examining the data in real terms tells a different story: adjusted for inflation, home prices remain nearly 20% below their pre-crisis peak.
This is why William Wheaton, a housing economist at MIT believes the market hasn’t recovered yet: Because Americans who bought when home prices were at their highs are still effectively in the red. He says not enough homeowners are "sitting on top of little nest eggs of equity and can say, 'Oh, you know, now we can go buy the house down the street we always wanted.' "
This process, which Wheaton calls “churn,” when people buy one home and selling another, hasn’t recovered, which is one reason for the sluggish recovery in homes sales figures.
"There's a lot of discussion right now about how sales should be more robust and they're not, given where we are in this stage of the economic recovery," he says. Americans are buying the same number of homes they were 18 years ago. And Wheaton says the population has grown since, so sales should be stronger.
Tight supplies are also in part due to this lack of churn as more people are choosing to stay put, leaving fewer available homes one the market.
Of course, as we’ve noted in the past, there are other factors at play: More millennials who are having trouble finding well-paying jobs are living with their parents for longer, delaying the process of having children and buying homes. Of course, in richer urban markets, this drop is being more than compensated for by wealthy foreigners hoping to stash their fortunes in US real estate, which they see primarily as a store of value.
However, all of these factors are really just symptoms of a larger issue: after nearly a decade of rock bottom interest rates, as Greg Kaplan, an economist at the University of Chicago puts it, the US economy still hasn’t gotten over the worst housing crash since the Great Depression. With central banks having literally thrown nearly $20 trillion at the problem, it is unclear what, if anything, will get it over the hump.