US real estate prices just passed their previous price peak, for the first time…since 2006. That may ring alarm bells for many markets, but this peak took over 75% longer to reach than last time…[That being said,] that works out to a 7% compound annual growth rate which isn’t all that realistic.
The original article has been edited here for length (…) and clarity ([ ])
US Real Estate Prices Are Now At The Highest Ever
Real estate prices across the U.S. passed the pre-Great Recession peak for the first time. January saw the index reach 207.40, a huge 0.75% jump from the month before. This brings the 12 month change to a 6.34% increase…
It Took Over 77% Longer For Prices To Rise This Time
The rise to this peak was a lot slower than it was pre-Great Recession. Peak to trough, it took 71 months, which is almost 6 years. To contrast, it took only 40 months to make the similar increase that resulted in the 2006 peak. Prices took ~77.5% longer this time around, which likely means it’s a healthier increase. That said, it doesn’t necessarily mean it’s justified.
The rate increase is still pretty steep, even though it climbed slower than the previous peak. Prices increased 51.5% over nearly 6 years, which works out to a 7% compound annual growth rate. At this pace, home prices would double every 11 years in real terms, which isn’t all that realistic. You know… since rents don’t move nearly that fast.
Price are increasing slower than they were pre-Great Recession, but still very fast. Even for metro areas that are booming, prices can only sustainably move with incomes…