When Will Home Prices Return to Pre-recession Levels?
With millions of homeowners having lost much of their net worth as a result of the housing crash, many have asked, When will home prices return to pre-recession levels? And the answer is neither simple nor encouraging.
What homeowners really want to know is when their lost equity will return, when they’ll be able to sell and walk away with cash for a down payment, or when they can get a home equity loan to supplement a college fund. Sadly, for many the answer is not soon enough, and for some, never.
Much of the equity lost by homeowners during the housing crash—some may argue that such gains were always a mirage—is lost forever; for even when a home’s price returns to pre-recession levels, the dollars gained are diminished by their loss of purchasing power. That loss can never be regained. One only has to look to the increased cost of food, healthcare or gasoline during the past decade to realize how our dollars continue to decline in value.
When will home prices return to pre-recession levels? The answer varies depending upon a number of factors; but that question may not be the one we should ask. Although most will see the price of their home return to pre-crash levels at some point, that point may be so far in the future as to be meaningless. Housing has undergone structural changes, and we must now adjust to those...
