In July of 2006, U.S. home prices reached their pre-recession peak. The 10-year anniversary of that crest comes about a year before home prices are expected to reach that level again.

Across the country, the national home price index remains 4% below the nominal 2006 peak, a sharp improvement from the 27% drop that occurred in the six years from July 2006.

But as with all averages, prices in some cities have already posted big gains. According to CoreLogic-Case-Shiller Index’s principal economist, David Stiff, home prices in a full 40% of U.S. metro areas have already surpassed their 2006 peaks, and another 30% are within 10 points of their previous peaks.

The five metropolitan areas where house prices have posted double-digit percentage increases compared with their previous peaks are:

• Denver-Aurora-Englewood, Colorado, 32%
• San Jose-Sunnyvale-Santa Clara, California, 28%
• Pittsburgh, Pennsylvania, 21%
• Nashville-Davidson-Murfreesboro-Franklin, Tennessee, 16%
• San Francisco-Oakland-Hayward, California, 15%

Does this indicate that another housing bubble is inflating? CoreLogic’s David Stiff doesn’t think so:

[T]he current run-up in prices is being driven almost entirely by fundamentals – solid job growth boosting housing demand and limits on supply as new home construction slowly drifts upward from record-low levels – and not by easy credit and investor frenzy. … The current rebound in housing markets … is mostly a story of solid jobs gains driving the rebound in home sales and price appreciation. Employment growth in all of these metro areas, with the exception of Pittsburgh, has been strong, exceeding the 9.6% national growth rate. … [T]here is very little speculation occurring in most housing markets, so the downside risk to prices is most likely limited to any potential weakness in the job market.

Pittsburgh, Stiff noted, was one of just a few areas that escaped the housing bubble and subsequent collapse in home prices. The city’s current peak price level increase reflects steady price appreciation over the past 20 years.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

Another Pennsylvania city illustrates how slow the home price recovery has been in some places. Philadelphia home prices remain 9% below their 2006 peak, while employment has risen by six points since 2011. And among the top five, only Pittsburgh has experienced slow employment growth, with job growth totaling just 2% in the five-year period.

Employment growth in the Denver metro area is 18% since 2011, while San Jose’s job growth is 21%. Nashville has grown jobs by 20%, and San Francisco’s growth is 19%.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.