Although median home values are increasing to record highs in more than half of the largest housing markets in the US, not all homes are recovering the value they lost during the housing crisis, according to Zillow’s Real Estate Market Report for August.
According to Zillow, in 24 of the largest 35 markets, homes in the bottom third of the market are least likely to have regained the value they lost during the recession. Zillow said the discrepancy in value recovery was seen particularly in the most populated places, with Detroit having one of the least balanced recoveries.
About two-thirds of Detroit’s most valuable homes have recovered from the market collapse, with a top-tier home in the city having a typical value of $284,800, more than the typical value during the bubble. Meanwhile, homes in the bottom third have only recovered 33.7% of the value they lost, with the median value for these homes at $53,000. Zillow said only 10.6% of the homes in this bracket have completely recovered.
“The housing market as a whole is moving at a steady clip, with high demand and low inventory combining to maintain strong home-value appreciation,” Zillow Chief Economist Svenja Gudell said. “Most new construction has been at the higher end of the market, so demand for the limited supply of entry-level homes is pushing up their values, but these homes also lost more value when the bubble burst. Many of these homeowners are still waiting to see their homes come back to where they were about 10 years ago. Even as headline numbers show an overall recovery, there are still thousands of Americans struggling to bounce back from the housing bust.”
Zillow said the uneven recovery adds to the increasing wealth gap across the US and follows a pattern similar to household income inequality. Although the median household income rose in 2016, more than half of the overall income went to earners in the top 20%.