The housing market is showing signs of a recovery, albeit a halting one. In 10 states, median home prices increased by more than 5.5% from July 2011 to July of this year. While there is no single reason why housing markets in these states have done so well, most have several things in common.
Many of them, like North and South Dakota, have maintained jobless rates at nationwide lows. In these states, home prices barely dropped when the national housing bubble burst. Since then, home prices in some of have even risen, while the national market plummeted. In these economically stable areas, home prices expected to continue to move higher, although recoveries are expected to be modest.
However, some of the states with the biggest home price increases were hit particularly hard by the housing collapse. In Florida and Arizona, home prices dropped by nearly 50%. In Nevada the drop was nearly 60%. In all three states, the recovery is expected to be temporary. Median home value change will lag the national trend in the next year, but will improve over the next five years according to Fiserv.
If the data tell anything, it is that the housing market recovery will continue to be uneven, and will be based to a large extent on what happened to home prices in geographically since its 2007. Housing markets in the states that exhibited economic strength throughout the recession will continue to improve relative to the national average. States that were broken by high unemployment and sharp drops in home values can expect their recoveries to be difficult, and in many cases, very long.
To create the list of the 10 states with the strongest housing markets, 24/7 Wall St. relied the Corelogic Home Price Index for the year that ended in July. We also reviewed foreclosure data from RealtyTrac to reflect the extent to which foreclosures rates undermine ongoing recoveries. We obtained home price forecast for the near-term, measured from the first quarter of 2012 to the first quarter of 2013, the first quarter of 2013 to the first quarter of 2014, and the first quarter of 2012 to the first quarter of 2017 from Fiserv. Median sales prices as of Friday, August 28 are from Trulia. State unemployment as of July 2012 is from the Bureau of Labor Statistics.