Previously Cold Secondary House Markets Are Starting to Recover

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By Jacob Maslow

couple looking at house to buyIt appears that the economic good news coming out of America is rolling along quite smoothly. We already know about the improving jobs picture. We already know about the improving home prices based on national trends. If you are looking for yet another sign that the economic recovery is probably here to stay, you only need to look at previously cold mid-range housing markets in the United States.

Unlike the housing markets of other countries, the housing market in the United States operates on a real-time basis. The price of homes in a particular area is driven by comparables. If you are looking to buy a house in a particular part of town, you only need to look at comparable houses in that area. If a house just sold at depressed prices, guess what. It is going to be the price in that area. If a house just got sold for twice its previous selling price, that is going to be the going price – pretty straightforward, pretty simple.

Unfortunately, the housing recovery in the United States has been rather uneven. Certain parts of the country have experienced red-hot growth. I am, of course, talking about the San Francisco Bay Area and the Greater Los Angeles Basin, particularly the West side of Los Angeles. However, this isn’t the case for many mid-range real estate markets. In fact, there are quite a number of areas in Las Vegas that are still depressed. I am talking about foreclosure level pricing.

The good news is that a lot of these mid-level markets are finally roaring back to life. You only need to look at the increase in the home prices in Houston, Austin, Denver, and Dallas to see that things are recovering quite well. This is due to the fact that these areas are also experiencing great job growth. Expect these patterns to improve.

However, this leads to another problem. The problem is that the overall price of homes in the United States can appreciate so fast and so high that it can price many would-be homebuyers out. If these people are priced out, then the market will hit a ceiling and trade sideways. That is the optimistic projection. The pessimistic view is that this may trigger yet another crash in the housing market.

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