Which Housing Markets Have Recovered From the Great Recession?

Courtesy of SmartAsset.com

When the entire U.S. housing market crashed in the Great Recession of the early 2000s, the biggest losses occurred between April 2006 and March 2011.

Pre-crisis House Price Index (HPI) peaks and mid-crisis troughs varied from city to city, but overall, prices fell by 33 percent during those five years.

Since then, the market has been slowly improving. Different cities, again, are experiencing different rates of recovery.  This study breaks down which cities out of the 100 biggest U.S. metro areas have rebounded the most in terms of housing prices and which have rebounded the least.

This chart shows where the housing market has recovered the most and the least for 2020.

Markets That Have Recovered the Most

  1. Boise, ID
  2. San Francisco-San Mateo-Redwood City, CA
  3. San Jose-Sunnyvale-Santa Clara, CA
  4. Seattle-Bellevue-Kent, WA
  5. Denver-Aurora-Lakewood, CO

Recovering Prices Hurt Affordability

While this list makes it appear that business is booming on the West Coast—and it is, in many cases—there’s another side to the issue.  Housing prices are skyrocketing in many areas because there simply aren’t enough affordable houses to go around. So it’s good news if you’re an investor or if you already own your home. But if you have an average income and you’re shopping for a home, not so much.

This study notes that Boise, with a trough-to-current HPI increase of 162.4 percent, “is among the fastest growing areas in the U.S. But despite strong job growth, close to half of renters in Boise are considered ‘costburdened,’ spending more than 30 percent of their income on housing. The city estimates needing 1,000 new housing units annually for the next 20 years.”

And increasing home prices in California are hardly good news.  San Francisco has essentially lost its middle class due to not having homes that average wage earners can afford.

From the data reported in this study, Denver’s market suffered the least in the big crash.  But rising prices are becoming an issue for prospective homebuyers there, too. In an October 2019 article about affordability in Denver, GlobeSt.com quoted president of Community Preservation Partners Anand Kannan as saying, “Unfortunately, as local economies expand, many people get left behind, and it’s often the most valuable members of a community—teachers, first-responders, etc.—who need help. The affordability problem doesn’t contain itself to the city limits, requiring a regional or national response.”

Markets That Have Recovered the Least

  1. Hartford-East Hartford-Middletown, CT
  2. New Haven-Milford, CT
  3. Bridgeport-Stamford-Norwalk, CT
  4. Camden, NJ
  5. Albany-Schenectady-Troy, NY

Meanwhile, on the East Coast…

People on the East Coast face a different problem: single-family homes, which often represent a homeowner’s single greatest investment, have not recovered their value.  While some of these markets declined more sharply in the recession than others, most have yet to return to pre-crisis peak levels. 

It sounds bleak, but Hartford was actually ranked as one of the top ten best metro areas for first-time homebuyers by Bankrate in 2019.  Low prices combined with low mortgage rates can make homes more accessible.

Keep Learning

No matter where you live, there are a lot of factors in play when you purchase a home.  It pays to understand the economic cycle, local market, state and local taxes, and of course your own financial circumstances. Whatever the market is doing, keeping yourself educated is the best path to long-term success.

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