The national housing recovery is an illusion, Scott Ryles, CEO of Home Value Insurance Co., told a room full of real estate reporters this morning in Denver.
Ryles was one of the first speakers at the National Association of Realtors convention being held through Saturday at the Brown Palace hotel.
Ryles, who displayed charts of housing prices going back to 1890, said that the steady appreciation of homes from the 1970s to 2006, created an expectation of prices rising forever
By historical standards, however, that three-decade stretch was an aberration, he said. What is happening now is that the prices are reverting to the mean. Home prices need to fall quite a bit more to return to historical values and appreciation, his charts indicated.
It is not just consumers who have been over-optimistic about a recovery, but a number of economists and other analysts, Ryles said.
Anyone who bought a home between 2004 and 2008 is underwater, that is, their home is worth less than their mortgage, he said.
Prior to World War II, Americans did not look at their homes as investments, but only as a place to live. Increasingly, however, homes became the greatest source of wealth for consumers, until their equity was wiped out during the most recent downturn
Of course, all real estate is local, he noted, and someone looking to buy a home doesn’t care what is happening nationally.
“There is no such thing as a national home price,” Ryles said. “There is only the price you pay for a home.”
However, local home prices are even more volatile than national prices, he said.
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