| Zillow’s Bubble Talk Misleads. Headline Needs A Second Look
June 19, 2017 Issue 272
Are Home Prices Approaching Bubble Territory? Yes but, NO!
Though Zillow is technically correct, not when we look at normal growth, which is to be expected over a 17 year run. Two views take us from an assumption misleading to America and Lake Arrowhead. We’re doing good.
VERSION #1, TRUE, BUT MISLEADING. Here is a graph of median prices as reported by the National Association of Realtors. Looks like Lake Arrowhead.
Which led Zillow to state: “National home values have surpassed the peak hit during the housing bubble and are at their highest value in more than a decade.”
LET’S SEE #2, A SECOND LOOK
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 3.6% annual appreciation (blue bars).
Bottom Line. As we can see, had there been no boom and bust, home values would be about where they are right now.
Coldwell Banker Sky Ridge Realty, Lake Arrowhead CA, 92352-1089 Since 1982.