At Advisor Perspectives Keith Jurow suggests that the recovery in housing prices has been greatly exaggerated, largely buoyed by the increases in the San Francisco, San Jose, and Los Angeles markets:
The three housing markets with the highest profit percentages are all major California metros. This is no accident and not a surprise. More than a year ago, 40% of all the outstanding bubble-era non-prime mortgages in California had already been modified, a percentage much higher than any other large state. This percentage has risen steadily from 17% in early 2011. Because of these modifications, the overall delinquency rate is much lower in California.
The result has been the complete collapse of foreclosures in California – from 30,000 at the peak in August 2008 to a mere 2,000 in August 2016 according to the highly-regarded California Real Property Report. The removal of so many of the lowest priced homes from the market, has artificially inflated both Case-Shiller and median sale prices in California.
Housing demand has been stimulated in California by two major factors. One is the employment boom in Silicon Valley due to the tremendous growth of five Internet giants – Apple, Google, Amazon, Facebook and Netflix. The other is the huge influx of wealthy buyers from China looking for a safe haven for their money. This has caused the high-end markets in both the San Francisco and Los Angeles metros to soar.
By comparison housing prices in Chicago are still 3% below peak. In most of the metropolitan areas of the United States housing prices have increased only 1% to 10% from their values in 2008. Cumulative inflation over the period has been about 15%. In other words except in select markets people have been losing money on their houses.
ZH had some regional charts on prices.
T minus 16 days and I’m no longer an Illinoisan.