The recovery in the housing market is showing a pattern far different from what followed previous downturns, experts say, suggesting that the dramatic price gains of recent months may not be sustainable.
The surge in home prices, seen most recently in the Standard & Poor's/Case-Shiller home price index released on Tuesday, is at least in part a function of record-low interest rates, extraordinarily low housing supply, and record-high volumes of investor money pouring into single family homes, analysts say.
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That means that market fundamentals may not be as healthy as the headline price increase numbers would suggest.
In Western U.S. states such as California, Nevada and Arizona, the housing crash and resulting foreclosure crisis was particularly acute, and played a large part in the 2008 economic crash. Yet home prices in these regions are soaring, according to the Standard & Poor's/Case-Shiller index, which tracks prices in America's 20 largest metropolitan areas.
Prices in Phoenix, Arizona rose 22.5 percent in the past 12 months - the biggest gain among all U.S. cities - followed by 22.2 percent in San Francisco and 20.6 percent in Las Vegas.
Those increases were part of a national jump of 10.9 percent in the 12 months from March 2012, the biggest price gain since April 2006.
Still, out of 50 million U.S. homeowners, 10.2 million are still "underwater" - that is, owing more on their mortgage that their house is worth, according to the National Association of Realtors (NAR).
In California alone, two million homeowners are underwater. Another 500,000 are delinquent on their mortgage payments, according to figures from ForeclosureRadar.com.
Because so many people cannot sell their homes without taking losses, the number of family houses on the market remains far below pre-crash levels.
At the height of the housing boom, in July 2007, 3.4 million single family homes were for sale, according to the NAR. In April 2013, just 1.9 million such homes are on the market.
Conventional homebuyers are also being muscled out by big investors who have been buying distressed properties in bulk and converting them to rentals.
In the southern California area known as the Inland Empire, an area of 4.3 million people and one million homes and an epicenter of the housing crash and subsequent foreclosure crisis, 52 percent of foreclosed homes that were purchased in the first quarter of 2013 were bought by Wall Street investors, according to John Husing, a regional economist. None of those homes were even advertised on the open market.
"So over half the market was not even seen by realtors and normal buyers," Husing said. "This is not a natural recovery. A lot of what is driving demand has nothing to do with a normal housing market. It's an anomaly caused by huge investment firms. This has kept families out of the housing market."
Sean O'Toole, ForeclosureRadar's chief executive, said a real housing recovery should be based on people living in homes in which they have a healthy equity stake, and a mortgage lending market not underwritten by the federal government in the form of loose monetary policy.
ForeclosureRadar.com also uses another metric - sales activity - to determine the health of the housing market. According to the firm, the number of homes actually sold is at the lowest number since 2008.
"We have artificially low interest rates, and low supply," O'Toole said. "You do get an increase in prices, but I don't think you have a real recovery."
Ken Fears, a senior economist at the NAR, said the distortions in the market could ultimately undermine its long-term health.
"While tight inventories can drive price growth, excessively stringent supplies can create headwinds to demand as consumers are priced out of the market or left with inadequate options," Fears said.
(Reporting by Tim Reid; Editing by Jonathan Weber and Tim Dobbyn)