In reports released yesterday, the Case-Shiller Home Price Index shows that, nationally, we have set a new record for average home prices, a record that was set in 2007 just before the market’s fall. Before we set off the fireworks, and parade down the street claiming victory we should peel that back a little bit and have a glance at the finer details and some specific examples here in the D.C. Metro that show us that things are not necessarily on the mends for all.

As we dig deeper and start looking at the Case-Shiller 20 City, and 10 City Indices we start to see that, though values in the larger cities, including Metro Washington, DC, are up the cities have not yet returned to their 2007 peak. The 10 City Index lags the furthest behind of the three charts. This means that smaller cities and middle America in general have benefited the most from the housing recovery.

The good news overall, is that the current pricing trend is based largely on more typical market dynamics of supply and demand than by ill advised lending practices or other outside influences. The big question will be how much rising interest rates will impact the continuation or stalling of current price growth.

Back to the bigger cities for a moment. Some cities, like Dallas, and Denver have well surpassed their 2007 peak. However, cities like New York, Los Angeles, and Washington, D.C. (yes, recession proof D.C.) have yet to recover fully.

In the D.C. Metro area many may find this as a bit of a surprise as we seem to see housing affordability become more and more of a challenge, but the reality is, that is somewhat isolated to a handful of high demand areas. Much of the region is still struggling to gain ground after the downturn in the market, particularly those areas that do not have direct Metro access, and those with lower performing schools.

Even some areas inside the beltway are not out of the red almost a decade later. Take the condos at The Palazzo at Park Center in Alexandria for instance. The Palazzo is just off of Leesburg Pike near 395. A great commuting location for drivers, but there is no Metro access. Most of the units were initially sold in 2007 and today original owners of 2 bedroom units are still selling for $70,000 – $80,000 below what they paid 10 years ago. For a time it was much worse than that!

It’s not isolated to the condo market either, if you look at this chart for Fairfax County as a whole, you can see the County itself is still trying to dig back out. There are areas that are doing fantastic, such as McLean that never really declined that much, and Falls Church, while others that are doing very poorly against that 2007 peak. Higher highs, and lower lows so to speak. Whereas in 2007 the peak was more ubiquitous.