Nearly every important set of data from the government and private sector analysts shows that the housing market has begun to recover. The housing recovery picked up steam in recent months. Home sales jumped in both December and January.
In some cities the rebound is so strong that housing prices are up by double-digit percentages year-over-year. However, it is worth pointing out that many of these comeback cities, such as Las Vegas, are those that were hit the hardest when the housing bubble burst. In other words, the home markets that suffered severe damage in 2008 through 2011 have bounced back, although, in most cases, not to their peak levels of 2006.
The data on the recovery make one thing very clear. Not all housing markets were badly hurt in the crash. The recovery has been very uneven. Like unemployment, changes to the national benchmark do not tell the entire tale. The devil is in the details as far as tracking the home prices is concerned.
One of the most widely followed measures of home prices is the S&P/Case-Shiller Home Price Indices. The base index tracks the prices in the 20 largest cities. It was set at 100 in January 2000. This allows observers to track home values for a period that stretches back more than 10 years.
A review of housing data shows how closely it is married with unemployment. New data from Case-Shiller for December indicate that the value of homes in Phoenix rose 23% from December of 2011 to 2012. In Detroit, the jump was 13.6% for the same period.
In Detroit, the unemployment rate rose above 17% in mid-2009. By contrast, national unemployment rates never rose above 10.1%. While Detroit’s unemployment rate remains worse than the United States as a whole, the city has since had a nearly miraculous recovery, with unemployment dropping to 10.2% in December of last year.
In December, the value of homes in the 20 cities Case-Shiller measures rose by 6.8% year-over-year. In seven cities, the rise was much more dramatic — in the double digits. 24/7 Wall St. reviewed the seven cities to find trends that could indicate what may have caused these jumps. Those same factors may be critical to the broad recovery of real estate across the nation in the longer term.