As home prices reach pre-recession levels, has market truly recovered?

According to a report from Realtor.com analyzing the property market since the Great Recession, the overall housing market has returned to pricing levels last seen in 2006. The U.S. median home sale price last year was $236,000, two percent higher than 2006. But that’s not a comparison meant to spook homeowners and investors fearing a repeat of the housing crash.

The market has returned to pre-crash prices, but the analysis finds the fundamentals—specifically “historically low inventory levels, much tighter lending standards, and significant job and household growth”—suggest we’re not in for a repeat. While calling the market healthy would be a stretch, especially for those searching for affordable homes and hard-to-find starter homes, the Realtor.com analysis suggests it’s on more solid ground.

"As we compare today's market dynamics to those of a decade ago, it's important to remember rising prices didn't cause the housing crash," said Danielle Hale, chief economist for Realtor.com, in release about the new report. "It was rising prices stoked by subprime and low documentation mortgages, as well as people looking for short term gains—versus today's truer market vitality—that created the environment for the crash."

Many markets have witnessed sustained, even substantial, growth: Austin home prices have risen 63 percent in the last decade, with Denver home values jumping 54 percent, and Dallas increasing by 52 percent. But, especially in the case of Texas, analysts see the steady increase as indicative of fundamental shifts in the job and real estate market, not the kind of unstable bubbles that caused the Great Recession.

“The Texas economy consistently grows faster than the nation,” Anil Kumar, an economic policy advisor and senior economist at the Federal Reserve Bank of Dallas, told Curbed. “It’s typically about one percentage point better than the nation, unless there’s some serious oil price collapse. This is the new normal going forward, as opposed to something that is approaching a correction.”

The analysis points to three main factors explaining why 2017 won’t be 2007. First, lending standards have tightened considerably since the Great Recession, due to the Dodd-Frank Wall Street Reform and Consumer Protection Act. The median home loan FICO score was 734 in 2016, compared to 700 in 2006, according to Urban Institute data. And the bottom 10 percent of borrowers, where an outsize amount of abuse from predatory lending practices occurred, has seen a comparable rise, with scores averaging 649 last year, as opposed to 602 a decade ago.

Second, as the report claims, these tight lending standards have also kept flipping and overbuilding in check. Research shows that flipping has declined as a percentage of total sales, dropping from 8.6 of all sales in 2006 (and exceeding 20 percent in certain metros such as Chicago) to 5 percent today, based on data from Corelogic.

Finally, the economy is on stronger ground. Unemployment, at 4.1 percent, has hit a 17-year low, and an average of 150,000 jobs have been created every month this year.

But, of course, supply and demand have also contributed to the rise in prices, especially in expensive metro areas where affordable housing is scarce. With fewer homes being built—there have been 600,000 fewer total housing starts and nearly 700,000 fewer single-family housing starts this year, according to Moody's Analytics—and a jump in single-family rental homes, supply is severely constrained, leading to a lack of affordable entry-level homes for first-time homebuyers.

Realtor.com noted that this past October represented the 26th consecutive month of inventory declines: the market currently averages a 4.2 month supply, compared to 6.4 months in 2007.

And, not every market has seen gains. Three larger markets have seen significant drops in housing value between 2006 and 2016: Las Vegas is down 25 percent, and Tucson, Arizona, and Riverside, California, are both down 22 percent.