When will we see home prices like we saw during the boom?
It’s no secret that prices went sky high to unsustainable and not affordable levels during the real estate boom. We look at the equity we thought we had in our homes during this anomaly and it’s common to hope to see those prices return someday soon.
Well, the truth of the matter is that we almost certainly won’t see 2005-2006 prices for many, many years. Some economists predict it will be another fifteen years before we see the prices back near peak levels. And if you look at historic home price appreciation, it realistically could be 2025 or longer!
A review of the five county Metro area (Orange, Seminole, Osceola, Lake and Volusia) shows 2010 year-to-date home prices at the lowest level since before the turn of the century! The prices this year based on 30,565 homes sold shows an average sale of $139,202 and a median sales price of $107,500. Compare that to almost 62,000 sales in 2006 and 2007 combined which had an average price of $287,967 and median price of $237,500.
So the average value is down a sobering 51.7% and the drop in median price is 54.7%. I think everyone likes a “half-price” sale at a retail store but it stings when it comes to home prices! It’s hard to picture prices going lower in spite of the foreclosures, short sales, high unemployment and sputtering economy. I’m thinking we have found the bottom!
While many people have hoped for a quick turnaround even as the market declined further, I think the economic data, tighter lending standards, conservative new appraisal laws and a severe hangover from the last boom suggests that prices aren’t going to appreciate quickly.
I think we’ve found the “New Normal” and more of us accept that as reality as the days pass. So many people have had their lives on hold waiting for the real estate market, many by necessity and other by choice, believing prices will “come back”. We’ll all make it through this together. Our great grandparents spoke about the Great Depression. We’ll tell our grandchildren about the Great Recession and the housing boom and bust as we began the new millennium!