THE HOUSING MARKET HAS RECOVERED, RIGHT? And our economy is buzzing along just magnificently, right? I tend to be an optimist and generally see the glass as half full. But at the same time I am still a bit of a realist, and I cannot help but wring my hands a little over the real condition of our economy.

The S&P Case Shiller Home Price Indices were released last week and the results were not all that great for many parts of the nation. Out West with the exception of Phoenix, values continued to increase in 2014, with the San Francisco composite index reflecting year-over-year gains of 9.3 percent.

On a national level, home prices increased just 4.5 percent when compared to prices one year earlier.

However, when we look at month-to-month gains, the pace of appreciation is definitely slowing. David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, was quoted as saying, “The housing recovery is faltering. While home prices and sales of existing homes are close to normal, construction and new home sales remain weak. Before the current business cycle, anytime housing starts were at their current level of about one million at annual rates, the economy was in a recession.”

In further comments Blitzer said, “The softness in housing is despite favorable conditions elsewhere in the economy.”

We are definitely seeing job growth; however, many who have gone back to work after long periods of unemployment have taken positions with pay at far lower levels than they previously enjoyed.

Then, when you account for inflation, even a worker who is making the same amount they made prior to the Great Recession is making less in real dollars today.

Lately I have been hearing a lot about the rising cost of rent. One theory as to why more folks are not buying homes is that the higher costs of rent are preventing many would-be homeowners from saving enough for a down payment.

With rising rents, one has to wonder why more folks are not saying goodbye to their landlords and finding some way to purchase instead of renting — particularly since interest rates are still incredibly low when compared to historical levels over the last 30 years.

One theory is that there are legions of people who lost homes during the Great Recession who are simply gun shy about the prospects of owning another home — they prefer to just rent.

Still others opine that the millennials — the group of folks who should be driving the market — are not able to purchase homes, or in many cases are simply choosing a more flexible and mobile lifestyle that doesn’t fit the long-term commitment of owning a home.

Whatever the reasons, home buying and home price appreciation seem to be slowing down in many regions of the country. Keep in mind that when we look at national or even regional statistics that the brush strokes are pretty broad and do not take into account pockets of supercharged growth — or, for that matter, pockets of higher crime and poverty that tend to lead to slower growth.

As in most things the answer lies in relativity. When compared to the crisis we were in back in 2008, our economy is far better off — but when we look at historical norms, perhaps we still have a long way to go.

Guy Benjamin (CAL BRE License #01014834, NMLS 887909) writes a weekly column for The Herald, offering general information on real estate matters. As it is impossible to address all possibilities and variations, he will try to answer individual questions by readers who contact him at 707-246-0949 or guyb@fairwaymc.com.height=”150″ />

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