With all the talk of a housing crisis and skyrocketing housing prices in the state, it may be hard to believe that in most parts of the state prices are still below peak levels. Yet, in LA County only 37.4% are worth more the bubble peaks according to a report by Trulia. A meager 23.5% of OC homes are worth more than the previous peak a decade ago. And in Riverside and San Bernardino counties an abysmal 3.4% of homes are worth more than bubble peaks. Only the most desirable coastal communities with strong job markets, such as Venice and San Francisco, have seen home values exceed the bubble peak.
That leaves about 2/3 of Southern California homes with a lost decade of price appreciation, effectively making them homerenters instead of homeowners with their banks as the landlord. And this situation could also partly explain the tight housing market. Inventories are low because it doesn’t make financial sense for underwater homeowners to put their homes on the market.
The LA County figure is on par with the national figure of 34.2%.
The middle of the country is faring better with 90% of homes experiencing real appreciation in such cities as Denver and Wichita.
“When it comes to the value of individual homes, the U.S. housing market has yet to recover,” Trulia chief economist Ralph McLaughlin wrote in a blog post Wednesday.
The picture painted by Trulia’s report differs from the overheated market we see depicted in reports citing median prices and the Case Schiller Index mainly because those measures look at the market as a whole and not the value of individual homes. Trulia uses their proprietary algorithms to determine the value of any given home and found the vast majority remain underwater since the bubble burst.