In Our View: An End to the Hibernation?

Home values nudging back up, but we've still got a long way to go



Multitudinous metaphors have been unleashed to describe what has happened to American homeowners and home values in the past five years. Columbian Business Editor Gordon Oliver provided an apt description in a story last month when he reported that the local “housing market began to wake from its long hibernation during this year’s second quarter.” He fortified that metaphor with the fact that home values in the Portland region increased almost 8 percent April through June, after four years of decline.Although there are at least three components in the overall housing market (construction, sales and home value), only one matters to the nervous homeowner: value. What’s my home worth? How soon might I regain some equity? If I decide to move, can I sell without losing money? And when?

Answers are slow to come, but we can all hope the hibernation-ending signs are real and not just a temporary stirring in the siesta. We think it’s real, because of more good news — both nationally and locally — following Oliver’s assessment last month:

Early last week, the national Zillow Home Value Index showed a 0.5 percent increase from June, plus a 1.2 percent increase in the past year. Among 167 metropolitan areas studied, 62 percent showed increases in home values, including the Portland area, where the average home value of $218,900 was up 1.9 percent year to year.

Also nationally, later last week the Federal Housing Finance Agency announced a 1.8 percent increase in home value in the second quarter. Of course, as The Oregonian opined: “It will take more than improvement in the housing market to create the type of economic growth needed to lower unemployment from more than 8 percent to a palatable level. But healthy home values are an essential ingredient to restoring consumer confidence and promoting long-term economic recovery.”

Accompanying the home value trend are continued low mortgage rates, still significantly below 4 percent on 30-year loans, lowest in four decades.

Locally, the number of homeowners who owe more than their homes are worth has decreased to 33.2 percent in the second quarter, down from 34.3 percent. Only a slight decline, admittedly, but after a five year hibernation, we’ll celebrate any flickering eyelids we can find.

As with all economy editorials in recent months, the “yeah, but … ” phrase remains necessary. Homeowners remain nowhere near a satisfactory recovery after losing 23 percent of their home values (nationwide) starting in 2007. And there continues to be little to no coordination among various recovery elements. The stock market has a good few months, then stagnates. The unemployment rate nudges down, then nudges back up. Consumer confidence climbs, but only marginally.

When all those economic indicators start in concert, the real recovery will be under way.

For now, it’s been a relatively and conditionally good few months for homeowners, especially those who include home equity in their investment portfolio.

Unfortunately, one of the most powerful contributors to a recovery — Congress — remains the most inert. Every political candidate insists his or her party holds the magical secret to ending the hibernation, but it looks like the Congressional nap will continue at least until the Nov. 6 election, if not through the end of the year.

In the meantime, homeowners, keep your fingers crossed.