In the Reno-Sparks market we are getting close to the median home price that was the peak before the market declined. In 4th Quarter 2005 our median price was $350,000. As of the end of May our median price was $335,575. With inventory shortages a key to our current market condition concerns about a bubble are ever present. Want to know more about market conditions? Contact the Shocket Team. Reno-SparksRealEstate.com
As home values continue to rise, some are questioning whether we are approaching another housing bubble. Zillow just reported that:
“National home values have surpassed the peak hit during the housing bubble and are at their highest value in more than a decade.”
Though that statement is correct, we must realize that just catching prices of a decade ago does not mean we are at bubble numbers. Here is a graph of median prices as reported by the National Association of Realtors (NAR).
We can see that prices rose during the early 2000s, fell during the crash and have risen since 2013.
However, let’s assume there was no housing bubble and crash and that home prices appreciated at normal historic levels (3.6% annually) over the last ten years.
Here is a graph comparing actual price appreciation (tan bars) with what prices would have been with normal appreciation (blue bars).
As we can see, had there not been a boom and bust, home values would essentially be where they are right now.