Photo: Robert Clark
It’s been nearly eleven years since the US housing market crashed and the Great Recession began, and many markets still have not recovered fully.
National home prices may have risen substantially over the last decade, but prices in some markets still remain well below pre-crash peaks, according to a special report released today by CoreLogic.
Residential home prices started to peak in some markets as early as 2005. Home prices collapsed two years later as the longest economic recession since World War II set in. In December 2008, average national home prices fell 18 percent year-over-year — the largest drop in national home prices ever recorded.
Since bottoming out in March 2011, national home prices have risen 51 percent. This comes after falling 33 percent during the recession. The average home price is now 1 percent above the peak level recorded in 2006.
Although the national average home price has “stabilized” and many economists believe the housing market has recovered from the crash, not every state’s home prices are back to their pre-crisis levels.
Nevada home prices saw the biggest drop during the recession, with a 60 percent peak-to-trough decline in prices. And yet, even after experiencing a 93 percent gain from its trough-to-current price level, Nevada home prices remain 23 percent below pre-crisis peaks. Additionally, some 9 percent of mortgaged properties were still underwater, or the valued owed is more than the market value of the home itself, as of the third quarter of 2017.
Some states, like North Dakota, fared “relatively well” through the housing crash. In all, ten states recorded peak-to-trough declines of less than 10 percent, while North Dakota recorded the smallest of all 50 states at 2 percent.
Limited supply and increased demand has helped many “hot” West Coast states to recover at a far quicker pace. California, for example, recorded a 42 percent decrease in home prices during the downturn, and increased 78 percent from the lowest level recorded during the crisis. Currently, California home prices are 2 percent above pre-crisis peak levels.
“California, Washington and Oregon are seeing some of largest trough-to-current growth rates in home prices. Greater demand and lower supply – as well as booming job markets – have given some of the hardest-hit housing markets a boost in home prices. Yet, many are still not back to pre-crash levels,” writes said Dr. Frank Nothaft, chief economist for CoreLogic, in the special report.
Local job market dynamics was a factor that helped determine how severe the housing crisis downturn impacted markets at the regional level.
Las Vegas, Miami, FL, and Chicago, IL recorded significant home price declines during the economic crisis, and have been “slower to recover.” Home prices in all of these markets are still below pre-recession peaks.
Other metros like Denver, CO and San Francisco, CA have recorded consistent annual home price appreciation. Both of these metro areas have low unemployment rates and are tech hubs. And, only 1 percent of homes in both Denver and San Francisco are still underwater.
“Evaluating the Housing Market Since the Great Recession” details the 11-year economic cycle surrounding the last US housing market “downturn,” examining both the boom and bust years — between 2006 and 2011 — and the ensuing recovery. CoreLogic used housing and economic data dated through December 2017 for the report.
Click here to read the entire special report.