Us house prices back to normal

Photo credit: Michael Patrick

US house prices have returned to normal, according to figures from Clear Capital, who forecast that peak prices may not be seen for another seven years.

National home prices are "right in line" with  (within 2 per cent of) inflation adjusted long-run average levels, notes the report, which suggests that prices have normalised following the housing bubble and subsequent market crash.

At their currency quarterly rate of growth (1.2 per cent), US property prices are rising steadily, but will not reach peak until 2021, Clear Capital reports.

In real terms, inflation adjusted home prices show 46 out of 50 metro markets’ home price levels at pre-2003 levels, with 25 out of 50 metros reporting prices below 2000 leves.

Honolulu is the only metro out of the top 50 to see home prices within peak levels, with inflation adjusted home prices resting at levels last seen in 2005. This anomaly has, in part, been driven by very unique supply and demand, a benefit of being a highly desirable tropical island.

The metro area of Sacramentos aw the ehe highest yearly gain at 25.4 per cent, while property in Las Vegas suffered a substantial pull back in January with yearly gains of just 21.3 per cent, down from 32.4 per cent in October. The market’s relatively quick moderating pattern indicates it reached an unsustainable rate of growth and is now correcting back to more normal historical rates of growth.

"It's time for conversations surrounding price trends to shift away from the 2006 peak as the point of reference, and back to current trends and forecasts," said Dr. Alex Villacorta of Clear Capital.

"Nationally, we don't see evidence of a price bubble forming again," Dr. Villacorta continued. "Double digit gains over the last year, while similar to rates of growth in the run-up to the bubble, are off a much lower price floor. Phoenix and Las Vegas, however, are showing signs of overheating."