Breaking News: US Real Estate Prices Reach Record High

US Real Estate Prices Reach Record HighWith real estate prices consistently rising you knew it had to happen and now it has: According to the federal government US home prices nationwide have finally topped the old record high set in March 2007.

The figure comes from the monthly House Price Index (HPI) issued by the Federal Housing Finance Agency (FHFA). Each month FHFA publishes a home price report, either a monthly update or a quarterly review. The monthly updates routinely include a comparison with the former peak price but the report for October — the latest available and posted December 22nd — strangely lacks the usual peak price comparison.

OurBroker.com asked FHFA about this and now the word has come back: Home prices nationwide have reached a new high. The index for the monthly HPI – the “purchase-only” series — is .3 percent above the March 2007 level.

We have a winner.

This is a huge deal. Home prices across the US have been in a ditch since 2007 when the mortgage meltdown demolished much of the housing market.

According to RealtyTrac, millions of foreclosure notices went out between 2005 and 2014 but now — finally — we have real evidence of recovery on a national basis.

It’s not just FHFA which has such upbeat numbers. The National Association of Realtors says “the median existing-home price for all housing types in November was $220,300, which is 6.3 percent above November 2014 ($207,200). November’s price increase marks the 45th consecutive month of year-over-year gains.”

Real Estate Prices Versus Reality

Before we get giddy, however, let’s have some perspective.

First, the recovery is not universal. Some areas are doing better than others. For the third quarter NAR reports that 154 metropolitan statistical areas saw rising prices. It also says prices fell in 24 metro areas.

Second, the Federal Housing Finance Agency index is not adjusted for inflation. The typical existing home sold for $217,400 in March 2007. If we correct for inflation it would take $248,849 to buy that same house with today’s dollars. When we correct for inflation there is a very long way to go before we catch up with 2007 in real terms.

Still, today’s FHFA price report is good news. According to the Federal Reserve homeowner equity has increased by $6.5 trillion during the past five years and for millions of Americans that’s a great way to end 2015.

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