US housing market has gained back economic downturn losses, but spread is uneven
The residential housing market in the United States has gained back all $9 trillion in value it lost when the market collapsed in 2007, new research shows.
But the uneven nature of the crisis and subsequent recovery has left many housing markets trailing behind, while others surge further ahead, according to the report from real estate firm Zillow.
More than half of the nation’s largest housing markets have regained all of the value lost during the recession, with the typical home worth $55,200 more than it was at the bottom of the housing bust.
When the housing bubble burst in 2007, home values plummeted and the typical American home lost 23% of its value. Since then, national home values have returned to their previous level, but the recovery has not been the same in all regions of the country.
West Coast markets have seen the strongest gains in home value, driven by healthy job growth and limited inventory exacerbated by limitations on new construction. The Sand States that saw the biggest losses when the housing market crashed have yet to fully recover.
The median home in both Las Vegas and San Jose lost about $190,000 during the housing crisis. However, the Las Vegas housing market was hit especially hard during the recession where that $190,000 equalled a 62% loss in value and its recovery is still lagging, with home values only recovering $131,000 so far. In San Jose, homes have gained $615,100 in value since the crisis, more than three times what was lost.
‘A decade after the financial crisis, the scars of the housing bust are still with us. The gap between the metros with the strongest and weakest housing market recoveries is as wide as it has ever been,’ said Zillow senior economist Aaron Terrazas.
‘The California Bay Area’s housing recovery stands out when compared to other markets that saw similar home value appreciation because it has more than regained all of its lost value. Strong, high paying job markets and persistently limited inventory sent prices skyrocketing, leading to the Bay Area having the most valuable housing markets in the country,’ he added.
Nationally, home values hit their lowest point in December 2012. Individual markets bottomed out between July 2011 and December 2012.
Denver home values fell just over 9% during the housing crisis, less than half of what the typical American home lost in value, largely because the Denver housing market never experienced much of a boom during the bubble years.
As Denver has emerged as a popular tech hub over the past decade, its home values have climbed rapidly. The median home in Denver is $379,500, about 61% more than the highest value reached during the mid-2000s bubble.