Have home prices in your area fully recovered from the declines suffered during the Great Recession, or are they still struggling to make it back to the peaks they reached before the crisis?
Even after years have passed since last decade's boom and bust, at least some homeowners in 35 major metropolitan have not yet seen their homes recover peak values reached during the previous boom. The good news is that as home prices rise, these unlucky homeowners are dwindling in number.
HSH.com’s "Home Price Recovery Index" uses the Federal Housing Finance Agency's (FHFA) Home Price Index as a basis to determine which housing markets have fully recovered (or more) and which still lag behind the housing recovery. The time period represented runs from the first quarter of 1991 and runs through the first quarter of 2018.
Home prices are rising broadly across the country, but in the first quarter of 2018, those gains were strong enough to help only two markets cross the threshold into "recovered" territory this quarter. That said, one leapt rather than crept in, as the El Paso Texas metro moved from 2.77% "underwater" to some 2.93% above it in just a quarter's time, a very impressive move. For the other market, we did expect to see the Tampa-St. Petersburg metro move up this quarter, and it did, rising from about 2 percent below to 1.36 percent above breakeven.
The top four markets strengthened their holds on those positions, with the Denver CO, Austin TX, Dallas TX and Ft. Worth metro areas all remaining firm in their slots. In fact, four of the top 10 slots are held by Texas metro areas, and a fifth Texas market just slipped out of the "most recovered" group. It was replaced by a new entrant, the Seattle metro area, which moved up three slots, climbing from #11 in the fourth quarter of 2017 up to #8 in the first quarter of 2018.
Of course, what these kinds of movements reflect is simple: Home prices in certain metros are skyrocketing year after year. A rising home price tide may be lifting all boats, so to speak, but some metropolitan boats are perched atop higher waves than are others, or are catching faster-moving tides at the moment.
Among the 65 markets who have already seen more than full recovery of previous price peaks, there were 13 with double-digit year-over-year increases. While six are in the top most recovered group, other fast movers included metro areas such as Colorado Springs (CO), Columbus (OH), Tacoma-Lakewood (WA), and Boise (ID).
Rising prices continue to improve the fortunes of homeowners in all markets even as these present challenges to home affordability for buyers. In some markets, the improvement is more stark than others, and even in some of the most challenged markets and those with the greatest chasm to fill from last decade's peak prices have made great strides in closing these gaps.
For example, two years ago (data from 1Q16) the Las Vegas metro market saw home values still about 46% below peak; this gap has now narrowed to only about 18 percent. Other challenged markets are storming higher, too, such as the Tucson, AZ metro, which was 32% below breakeven just two years ago and now is about 14% below, or the Orlando, FL metro, where a 28% gap two years ago has now shrunk to just over 8 percent.
Even in markets that haven't yet achieved full recovery, there are a few standout metro areas where price gains are happening with great velocity. Areas such as Las Vegas (NV), Fort Lauderdale-Pompano Beach-Deerfield Beach (FL), Riverside-San Bernardino-Ontario (CA) and the Phoenix-Mesa-Scottsdale (AZ) metros are all coming up fast. As well, there are plenty of other not-yet-recovered areas with mid and high single-digit gains, too, so gaps in the remaining 34 markets closing everywhere, if at varying speeds. Sixty-five already recovered markets and 34 not-yet- recovered leaves just one in suspension, as the Nassau County-Suffolk County (NY) metro is actually again at its peak value this quarter.
Although you often hear about skyrocketing real estate values in California, three Golden State metros actually have the most value gap yet to recover: the Bakersfield, Stockton-Lodi, and Fresno, CA metros are holding the bottom three spots despite solid home price gains over the last year. At least for the moment, the Elgin (IL) escaped the markets with the most distance yet to travel to full price recovery, and the Lake County-Kenosha County, IL-WI metro slipped down into the group.
Of course, we only review trough-to-peak for each market in our evaluation, so your local experience in price changes will of course be different. To see what's happened with home prices during the time you've owned your home, check our home value estimator, MyHPI. To see where you are in your mortgage, use our mortgage amortization calculator. The combination of price increase and your retirement of the amount you owe may see with a larger equity stake than you think.
Currently, 65 of the top 100 metros are at new highs.
Our "nearly recovered" group contains those areas with current values only about one or two percent below previous highs and who are likely to be next in line to hit "fully recovered" in the next quarter or so. With home prices still surging, as many as six markets may cross over soon: Oxnard-Thousand Oaks-Ventura, (CA), New York-Jersey City-White Plains, NY-NJ metro, Phoenix-Mesa-Scottsdale (AZ), Albuquerque (NM), Detroit-Dearborn-Livonia (MI), Jacksonville (FL) and Providence-Warwick RI-MA are all in focus at the moment.
Aside from the 65 metros that have recovered (and including the "nearly recovered" group above) there are a total of 18 markets now within 10 percent of previous peaks, a level potentially achievable by some in another year's time of steady price increases.
However, regular price gains quarter after quarter aren't a certain thing. In fact, there were 13 markets where prices actually declined on a quarter-to-quarter basis. It may be that some markets are seeing price increases leveling off or even topping out. Hitting full recovery may be a race against time for some metros; give the age of the economic expansion, some economists are suggesting the next recession might only be a couple of years away, and that could soften home prices anew.
10 metro areas that have recovered the most
|Metro Name||Peak Value||Bottom Value||Current Value||Amount Above Peak|
|Austin-Round Rock, TX||269.65||259.70||451.66||67.50%|
|Dallas-Plano-Irving, TX (MSAD)||172.21||165.26||285.49||65.78%|
|Fort Worth-Arlington, TX (MSAD)||168.92||160.97||268.35||58.86%|
|San Francisco-Redwood City-South San Francisco, CA (MSAD)||277.02||214.35||432.79||56.23%|
|Houston-The Woodlands-Sugar Land, TX||200.40||193.72||306.69||53.04%|
|Seattle-Bellevue-Everett, WA (MSAD)||298.32||205.12||421.72||41.36%|
|Buffalo-Cheektowaga-Niagara Falls, NY||146.82||146.00||207.18||41.11%|
|Honolulu ('Urban Honolulu'), HI||195.86||174.28||274.77||40.29%|
10 metro areas that have recovered the least
It is important to note that many markets -- even the 10 that still remain the furthest from their boom-year price peaks -- have seen significant price recoveries since hitting their bottom values. However, home prices in areas like Las Vegas may have been inflated to such a degree that even when they return to a “normal” value they may still be well below their previous price peak.
For example, despite more than a 125 percent rise from the metro's lowest value (a figure reached in the fourth quarter of 2011), there is still a gap of about 18 percent yet to go in the Las Vegas metro. There are plenty of other markets with a similar tale to tell, and places where the home price recovery is happening at a much slower pace, too.
It's important to note that even in markets that have not yet returned to previous peaks, it's not as though borrowers have no equity in their homes. Underwater or no- or low-equity situations might only exist for a relatively small slice of properties purchased during peak pricing times of last decade's boom.
For example, if someone purchased a home in the Sacramento, CA metro area before the second quarter of 2005, our calculations suggest that the value of your home has recently risen to or is now slightly above its original purchase price. This is also the case if the home was purchased when prices had begun to decline, in this case after the second quarter of 2006. In this metro, only homes purchased in this one-year window have yet to reclaim their original purchase value.
In either case, years of making regular payments should also by now given the homeowner a considerable equity stake. In the case of a home purchased in early 2005 (and assuming no refinance of the mortgage) the homeowner would have paid off about 24 percent of their original loan balance by now; for a home purchased early in 2006, about 27 percent of the loan amount will have been retired by now. This calculation doesn't include any downpayment the homeowner may have made, so the equity stake would be increased by that amount. In the case of a pre-2Q05 purchase, the homeowner would likely have a minimum 32 percent equity stake.
Similar experiences should be seen in other markets, too. Also, as home prices generally continue to increase over time, this "yet unrecovered time period" will continue to narrow. For example, in Sacramento, this time period has shrunk by six quarters over the last year alone.
|Metro Name||Peak Value||Bottom Value||Current Value||% Needed to Regain Peak|
|Cape Coral-Fort Myers, FL||317.40||131.83||265.07||19.74%|
|Camden, NJ (MSAD)||224.39||164.10||189.28||18.55%|
|Las Vegas-Henderson-Paradise, NV||269.19||100.84||227.96||18.09%|
|New Haven-Milford, CT||202.17||153.97||172.15||17.44%|
|Lake County-Kenosha County, IL-WI (MSAD)||208.84||139.24||183.29||13.94%|
How has the value of YOUR home changed?
Neither most nor least: 80 more metro areas
Here's a look at the remaining 80 metro areas from the FHFA's HPI list.
|Metro Name||Peak Value||Bottom Value||Current Value||% Needed to Regain Peak||Amount Above Peak|
|Anaheim-Santa Ana-Irvine, CA (MSAD)||288.13||197.19||317.11||n/a||10.06%|
|Atlanta-Sandy Springs-Roswell, GA||199.95||140.25||248.63||n/a||24.35%|
|Baton Rouge, LA||229.19||213.22||269.8||n/a||17.72%|
|Boise City, ID||297.09||163.41||355.74||n/a||19.74%|
|Boston, MA (MSAD)||270.06||223.02||314.94||n/a||16.62%|
|Cambridge-Newton-Framingham, MA (MSAD)||257.89||214.1||312.5||n/a||21.18%|
|Charleston-North Charleston, SC||286.85||201.94||364.74||n/a||27.15%|
|Chicago-Naperville-Arlington Heights, IL (MSAD)||238.4||160.03||216.85||9.94%||n/a|
|Colorado Springs, CO||259.86||216.01||349.37||n/a||34.45%|
|Detroit-Dearborn-Livonia, MI (MSAD)||207.99||113.23||204.2||1.86%||n/a|
|El Paso, TX||195.17||169.02||200.89||n/a||n/a|
|Elgin, IL (MSAD)||202.51||130.44||178.13||13.69%||n/a|
|Fort Lauderdale-Pompano Beach-Deerfield Beach, FL (MSAD)||352.86||177.55||333.31||5.87%||0.00%|
|Gary, IN (MSAD)||186.4||157.2||202.1||n/a||8.42%|
|Grand Rapids-Wyoming, MI||185.57||139.7||243.13||n/a||31.02%|
|Greensboro-High Point, NC||168.16||145.06||184.52||n/a||9.73%|
|Hartford-West Hartford-East Hartford, CT||173.51||145.25||157.66||10.05%||0.00%|
|Kansas City, MO-KS||201.27||164.99||248.02||n/a||23.23%|
|Little Rock-North Little Rock-Conway, AR||191.11||181.73||209.921||n/a||9.84%|
|Los Angeles-Long Beach-Glendale, CA (MSAD)||277.33||166.63||298.23||n/a||7.54%|
|Louisville/Jefferson County, KY-IN||200.55||187.26||257.24||n/a||28.27%|
|Miami-Miami Beach-Kendall, FL (MSAD)||419.61||214.68||390.32||7.50%||n/a|
|Milwaukee-Waukesha-West Allis, WI||236.2||190.83||254.71||n/a||7.84%|
|Minneapolis-St. Paul-Bloomington, MN-WI||264.78||189.81||286.72||n/a||8.29%|
|Montgomery County-Bucks County-Chester County, PA (MSAD)||213.7||184.51||225.2||n/a||5.38%|
|Nassau County-Suffolk County, NY (MSAD)||302.38||238.14||302.37||0.00%||n/a|
|New Orleans-Metairie, LA||264.6||223.06||302.63||n/a||14.37%|
|New York-Jersey City-White Plains, NY-NJ (MSAD)||272.78||218.59||270.37||0.89%||n/a|
|Newark, NJ-PA (MSAD)||268.11||207.12||253.06||5.95%||n/a|
|North Port-Sarasota-Bradenton, FL||344.43||161.82||323.9||6.34%||n/a|
|Oakland-Hayward-Berkeley, CA (MSAD)||309.01||163.42||350.64||n/a||13.47%|
|Oklahoma City, OK||201.9||192.81||255.01||n/a||26.31%|
|Omaha-Council Bluffs, NE-IA||201.32||181.24||251.07||n/a||24.71%|
|Oxnard-Thousand Oaks-Ventura, CA||284.94||172.26||283.84||0.39%||n/a|
|Philadelphia, PA (MSAD)||239.87||206.71||276.6||n/a||15.31%|
|Riverside-San Bernardino-Ontario, CA||274.01||127.89||247.17||10.86%||n/a|
|Salt Lake City, UT||354.38||262.21||442.35||n/a||24.82%|
|San Antonio-New Braunfels, TX||215.63||199.3||301.74||n/a||39.93%|
|San Diego-Carlsbad, CA||298.5||189.38||325.14||n/a||8.92%|
|San Jose-Sunnyvale-Santa Clara, CA||289.34||198.71||399.61||n/a||38.11%|
|Silver Spring-Frederick-Rockville, MD (MSAD)||279.96||206.64||270.21||3.61%||n/a|
|St. Louis, MO-IL||212.14||174.2||229.32||n/a||8.10%|
|Tacoma-Lakewood, WA (MSAD)||295.37||181.64||340.07||n/a||15.13%|
|Tampa-St. Petersburg-Clearwater, FL||318.06||313.79||318.06||n/a||n/a|
|Virginia Beach-Norfolk-Newport News, VA-NC||275.25||206.95||249.79||10.19%||n/a|
|Warren-Troy-Farmington Hills, MI (MSAD)||206.7||123.73||226.82||n/a||9.73%|
|Washington-Arlington-Alexandria, DC-VA-MD-WV (MSAD)||284.17||205.42||298.85||n/a||5.17%|
|West Palm Beach-Boca Raton-Delray Beach, FL (MSAD)||323.28||154.92||310.1||4.25%||n/a|
|Wilmington, DE-MD-NJ (MSAD)||216.82||164.73||196.5||10.34%||n/a|
More about the HPI
The Home Price Index is a broad measure of the movement of single-family house prices. It has been published by the Federal Housing Finance Agency and precursor agencies since the fourth quarter of 1995.
For each market, the index uses 1990 home prices as a basis. Those dollars are "normalized" to a value of 100 for each market; that is, regardless of the actual dollar cost, the index value for a given market becomes 100. For example, a home price in Allentown, PA in 1990 might have been $65,000; this becomes a base value for Allentown of 100, and changes since then are presented as percentage changes from that initial 100 value.
The HPI is based on transactions involving conforming, conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included. The HPI does not include property transactions backed by FHA, VA, USDA or non-conforming (i.e. jumbo) mortgages.
The HPI is updated each quarter as additional mortgages are purchased or securitized by Fannie Mae and Freddie Mac.
The HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinances on the same properties.
The HPI shows the relative change in prices in a metropolitan area from quarter to quarter or period to period. HSH.com has pulled out information from each area to show the amount of change from 1990 to the pre-housing-crisis peak, the low achieved during or after the peak, and how much improvement has taken place since that near-term bottom.
The FHFA uses the revised Metropolitan Statistical Areas (MSAs) and Divisions as defined by the Office of Management and Budget (OMB) in February 2013 (and revised in July 2015). If specified criteria are met and an MSA contains a single core population greater than 2.5 million, the MSA is divided into Metropolitan Divisions.
For more details on the HPI and how it is put together, see http://www.fhfa.gov/Media/PublicAffairs/Pages/Housing-Price-Index-Frequently-Asked-Questions.aspx