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The Housing Market Slump Still Exists in Some Locations

During 2016, home values climbed in 96 out of the 100 biggest metro areas across the country. This is great news for the US economy, but there are a few places where the housing market slump still exists. Even as home prices continue to soar to near-record highs, sellers in other parts of the country are struggling to find buyers.

housing market slumpPrices are Rising

While home prices continue to rise due in part to the national housing shortage, they still haven’t returned to the same values that existed prior to the housing market slump. For example, Harvard University publishes an annual report called the State of the Nation Housing Report. In it, statistics showed that home prices did climb 5.6% through 2016. This is great news, but when you consider inflation, which continues to climb thanks to economic success, the outlook is a bit different. Home prices were right at 15% lower than they were before the crash, even after climbing 5.6% through 2016.

Where is Recovery Slower?

In 97 out of 100 of the largest metros in the country, home values climbed. Of these, though, only 41 reached new highs. Values in 32 locales actually decreased 15% when figuring for inflation, and while homes in metros along the East and West Coasts saw the biggest increases (more than 20% since the turn of the millennium), the Midwestern markets failed to meet expectation. While coastal metros seem to get more publicity than their inland counterparts, it’s areas just like the Midwest that make up the crux of the housing market – and those areas are still slowly recovering from the housing market slump.

Poorer Neighborhoods Recovering at a Crawl

Some of the poorer neighborhoods in the country are faring the worst at the start of summer 2017. On average, these areas were nearly 18% under where they were before the housing market slump compared to just over 3% for wealthier areas. Another reason why poorer areas are still suffering has to do with supply and demand. Because there’s not as much wealth in these locations, home tend to sit on the market far longer, which inevitably drives down their prices. What’s more, based on their locations, home values themselves are lower than in other parts of the country.

New Construction is Slow, Too

In the southern part of the country, new construction is booming – it went up 84% in just five years. However, in some parts of the country, which include the Northeast, and especially along the coast, construction has slowed down because of the cost of materials and land. Out West, in places like California, Phoenix, Las Vegas, and even Denver to an extent, new builds are anywhere from 40% to 80% below the peak prior to the housing market slump. Things are improving, albeit slowly.

While most of the country has seen the worst of the housing market slump and is well on the road to recovery, poorer communities, especially in the Midwest, are struggling to gain solid ground. There are improvements, however small, and new opportunities along with less stringent credit requirements may just help people in these locations become homeowners after all.

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