From Sulman Quaishi:
Forget the harsh winter. Higher home prices are stifling sales around the country, and low inventories aren’t helping.
After an epic drop in prices following the financial crisis, the thought was that rising home prices were a sign that all would be well again soon.
It may seem counterintuitive, but fast paced increase of home values are perhaps the biggest negative in today’s housing recovery.
Two new reports point to weakened affordability as the primary barrier to more robust home sales.
Home values in 60 of the 300 major metropolitan markets surveyed by Zillow have already exceeded or are expected to exceed their prerecession peaks in the next year.
Many major markets are already considered unaffordable, with people paying a greater share of their monthly incomes on mortgage payments than historical norms.
The lows of the housing recession are becoming an increasingly distant memory as home values reach new highs and homes become more expensive than ever in many areas. This is a remarkable milestone coming only 2½ years after the end of the worst housing recession since the Great Depression,” said Zillow Chief Economist Stan Humphries.
The losses from the recession have already been, or are close to being, erased in nearly 20 percent of metro housing markets studied by Zillow. Researchers there say prices in more than 1,000 U.S. cities could be more expensive than ever within the next year.
The rise in home prices, occurring in the absence of comparable rises in employment and wages, is staggering.