Over the past few years, there has been significant recovery for buying activity – and subsequently, for home prices as well – across the country. However, the improvement seen during that time has not exactly been uniform, with some markets getting absurdly hot in short order before cooling down, and others going through a long, slow, steady process of rising property values. That's a trend that should continue for some time to come.
Places like New York City and a number of markets in California such as San Francisco saw upticks of activity in their housing markets in the wake of the recession the likes of which basically have not ever been seen before. In those metropolitan areas, prices rose so quickly and steeply that they brought the markets to levels well above pre-recession norms in terms of both the amount of activity and how much even the most modest homes were selling for. Many experts considered these levels to be unsustainable, and to a certain extent that was indeed the case, but even now, years after those markets heated up in the first place, they continue to be in great shape relative to where they were prior to the downturn.
What came next?
After that, though, several other markets have seen their recoveries come somewhat more slowly, rising past pre-recession norms – albeit only slightly – and staying at that relatively warm level as more people sought to move to larger cities. What's interesting, however, is that there are also a number of markets that experienced this heating-up but were also set so far back by the impact of the recession in the first place that even significantly invigorated activity wouldn't get them back to the levels being experienced prior to the economic downturn for years to come.
That was especially true of cities where foreclosures were most common, such as Phoenix and Miami. There, homes were more often being scooped up at extremely low prices by investors or speculators, and then left vacant, so the recovery in terms of homebuying activity was significant but in terms of price increases remained fairly muted. As a consequence, even with a lot more activity in those cities over the next few years, it's possible or perhaps even probable that they won't reach pre-downturn normalcy for a while longer.
In addition, many cities are now starting to see home prices rise to levels well above those of their outlying suburbs, but also see no signs of slowing very much, if at all. This is interesting because, in the past, values in cities tended to reach something of a critical mass that forced more residents out to the suburbs, but that is now happening far less, particularly because young adults these days seem to value city life far more than previous generations had.
That might present some buying opportunities for consumers who are looking to get a good deal on a home over the next year-plus, because combining still-low prices with near-record mortgage affordability can help them save thousands.