Monday, September 17, 2018

A decade after the housing crisis, a new story emerges

Interesting to keep up with the housing market a decade after the housing bust back in 2008. Ten years later has it recovered? Are we in a bubble again? States like CA have recovered with Northern California's Silicon Valley leading the pack with a 74% increase over the previous real estate bubble. Location matters most when buying real estate. Urban areas with sustainable economies fair the best in the long run. According to Trulia there was a 53% gain in 100 of the largest metropolitan areas. In contrast rural areas continue to stagnate at only a 28% gain. Silicon Valley and Denver had the largest gains. Las Vegas, Chicago and Orlando are still 14-16% below their levels before the pre-crisis financial bust. Population growth increases with robust job opportunities for urban centers in contrast to declining rural areas which are seeing migrations and stagnate growth. This is true also in Silicon Beach area's Playa Vista the tech hub center of Los Angeles fueling a higher demand along with rising housing prices. The housing market is doing well in our golden state of California.

I'm a real estate broker associate with Re/Max Estate properties based out of Marina Del Rey/Venice Beach the epic center of LA's silicon beach and loving serving the community with all their real estate needs. Feel free to connect with me with any questions. Thinking about buying or selling in the area? I'm here to assist as I cherish the beach lifestyle. Relocating so many to the area is so rewarding.

Sandra Lew  -CalBRE # 01920376
Cell: 310-963-1623
Broker Associate
Re/Max Estate Properties
124 Washington Blvd.
Marina Del Rey, CA 90292

CBS News by Rachael Layne

a close up of a map

As many as 10 million Americans are believed to have lost their homes because of the financial crisis that erupted a decade ago, according to the St. Louis Federal Reserve. The crisis wiped out almost $8 trillion in household stock-related wealth and $6 trillion in home value after banks, mortgage lenders and financial companies provided loans to speculators, house flippers and people who couldn't afford to pay, spinning the economy into the worst financial disaster since the Great Depression.A decade later, how does the U.S. housing market look?

Homeownership is below pre-crisis levels
At the end of June, roughly 64 percent of homes were owner-occupied, according to statistics from the St. Louis Fed. That's below the historic highs of 2004, four years before the bankruptcy of Lehman Brothers, widely used to mark the acceleration of the crisis.   The current homeownership rate represents a slight increase from the 2016 low of 63 percent. The gain may signal that Wall Street is trading more mortgages as the Federal Reserve raises interest rates and lawmakers ease some of the post-crisis regulations on banks.

Fewer young adults and minorities own homes
Between 2004 and 2016, overall homeownership rates plummeted 8 percent, according to a study from the Pew Research Center. Demographics also changed.
Younger Americans felt the impact more than older homeowners. For adults between 25 to 44, the homeownership rate dropped 16 percent. And for adults younger than 35, the rate plunged 18 percent.

A decade later, it's clear the crisis delayed a traditional marker for adulthood -- homeownership -- for a greater number of young people.

"The typical household head is older now – age 51 today vs. 45 in 1994," the researchers wrote. "Older households tend to be more likely to own their homes than younger households, and thus today's homeownership rate is being propped up, in part, by an aging America." The crash is still being felt more keenly by non-white groups as well. Black households, for instance, also now own homes at a rate that's 16 percent lower, at 41 percent. That compared with ownership of white households at 72 percent, just a 5 percent slip in the same time period, according to the Pew study.
Prices are up, but are rising even faster in cities

If you live in a city, chances are real estate is now more expensive than in rural areas. Migration to cities is helping to drive the increase, according to a recent study from real estate website Trulia.

In the five years ending mid-2018, home values in the 100 biggest metropolitan areas rose 53 percent, according to Trulia. That's double the gain in rural areas, where property values rose 28 percent, the study found. The difference "between some of the largest metro areas and rural America is especially stark—many metros have seen robust growth in jobs and home prices, while many rural areas have stagnated," wrote Felipe Chac√≥n, a housing economist for Trulia, in the report. "This divergence has boosted demand for housing in the nation's cities, fueling rapid rises in home prices.

A population shift to those urban areas is contributing 
From 2012 to 2017, the U.S. population grew 3.7 percent. But in the 100 biggest metro areas, it expanded 4.8 percent. In rural areas, the population dipped 1 percent, the Trulia study found. Even among the urban areas, some cities are far more expensive than others. In Silicon Valley, the area around San Jose, California, the current median home is worth $1.29 million, statistics released this week by real estate search company Zillow showed. That's 74 percent higher than the top of the real estate bubble and more than double from its post-crisis low.  Denver was next on the list of increases, with a value of $397,800. That represents a 66 percent rise.

Contrast that with Las Vegas, where values are still 16 percent below their pre-financial crisis level. Orlando and Chicago homes remain almost 14 percent below their pre-crisis values, according to Zillow.

Rising interest rates are also helping tap the breaks 
The Federal Reserve has already raised interest rates twice this year, and is expected to hike them twice more to keep the economy -- and the housing market -- from overheating. "While housing affordability is still running above longer-term historical levels, rising prices and interest rates have taken some steam out of demand," Deutsche Bank economists wrote in an August note looking at the housing market.


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