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 37 major metropolitan have not yet recovered peak values reached during the previous boom.
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 third quarter of 2017.
New this quarter:
There again were no changes in the metros that make up the top 10 "most recovered" group in the third quarter of 2017, but two switched positions, at least for the moment. The San Francisco metro area moved up to number 4, and the Houston metro took its former spot at number 6. It's not clear to what extent the tremendous flooding in Houston during the period had on flattening out home prices, but there was likely at least some, so we may see a bit of reversal with the next update.
To have new entrants crack into the top ten group, we'll need to see accelerating home prices in one metro area relative to another; if current trends continue, there is a good chance that a couple of metros in the Pacific Northwest may do just that before long. The Seattle, WA and Portland OR metropolitan areas are moving up fast; two years ago, Seattle was ranked 32 in the group of recovered markets, moved up to 20 just four quarters ago, and is now up to position 11. The Portland, OR metro area has also been moving steadily higher, from 21 two years ago, to 14 last year, to 12 now.
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.
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, just two years ago (third quarter 2015) the Las Vegas metro market saw home values still about 54% below peak; this gap has now narrowed to only about 30 percent. Other markets, like Stockton, CA, or Tucson, AZ or Elgin, IL have seen their gaps shrink by half or more in that time.
The group of ten markets that is still the furthest distance from full price recovery saw one change, as the Riverside/San Bernardino metro moved up the ranks and out of the "bottom" group. The Tucson metro area apparently had only enough exit velocity to escape the group for one quarter, but slipped back into it this quarter. There was a shuffling of ranks as eight markets swapped positions among the ranks, with the Bakersfield metro area now the market with the greatest distance to cover.
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.
Although home prices continue to rise almost everywhere, only one market managed to join the "fully recovered" group this quarter. The Cleveland-Elivra, OH metro joined the ranks of the recovered this quarter, with prices now 1.04 percent above the market's previous price peak, a value recovery process that took over 11 years to complete.
Currently, 63 of the top 100 metros are at new highs.
Our "nearly recovered" group contains those areas with current values only about one percent below previous highs and who are likely to be next in line to hit "fully recovered" in the next quarter or so. At the moment, there is only one metro in line -- the El Paso, TX metro area. Three more metros are close, but would need a big fourth-quarter bump to get them there -- the Tampa-St. Petersburg-Clearwater, FL, Nassau County-Suffolk County, NY and New York-Jersey City-White Plains, NY-NJ metro areas could make the leap in the next period, but more likely will make the leap in the next couple of quarters.
Aside from the 63 metros that have recovered (and including the "nearly recovered" group above) there are a total of 17 markets now within 10 percent of previous peaks, a level potentially achievable by some in another year's time of steady price increases.
10 metro areas that have recovered the most
|Metro Name||Peak Value||Bottom Value||Current Value||Amount Above Peak|
|Austin-Round Rock, TX||269.84||259.77||436.67||61.83%|
|Dallas-Plano-Irving, TX (MSAD)||172.40||165.30||277.69||61.07%|
|San Francisco-Redwood City-South San Francisco, CA (MSAD)||277.04||214.43||424.12||53.09%|
|Fort Worth-Arlington, TX (MSAD)||168.95||160.86||252.58||49.50%|
|Houston-The Woodlands-Sugar Land, TX||200.62||194.16||296.90||47.99%|
|San Antonio-New Braunfels, TX||216.06||199.25||293.57||35.87%|
|Buffalo-Cheektowaga-Niagara Falls, NY||146.91||146.22||198.49||35.11%|
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 100 percent rise from the metro's lowest value (a figure reached in the fourth quarter of 2011), there is still a gap of almost 33 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 fourth quarter of 2004, 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 first quarter of 2007. In this metro, only homes purchased in this 2.5-year window have yet to reclaim original purchase values.
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 late 2004 (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 2007, about 16 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-1Q04 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 two quarters over the last year alone.
|Metro Name||Peak Value||Bottom Value||Current Value||% Needed to Regain Peak|
|Las Vegas-Henderson-Paradise, NV||269.11||100.72||206.67||30.21%|
|Camden, NJ (MSAD)||224.62||164.77||182.79||22.88%|
|New Haven-Milford, CT||202.52||154.24||165.58||22.31%|
|Cape Coral-Fort Myers, FL||317.85||131.96||261.09||21.74%|
|Elgin, IL (MSAD)||202.54||130.21||173.72||16.59%|
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)||288.25||197.33||304.81||n/a||5.75%|
|Atlanta-Sandy Springs-Roswell, GA||199.92||140.27||239.88||n/a||19.99%|
|Baton Rouge, LA||229.08||213.16||269.23||n/a||17.53%|
|Boise City, ID||297.63||164.28||327.12||n/a||9.91%|
|Boston, MA (MSAD)||270.5||222.93||303.66||n/a||12.26%|
|Cambridge-Newton-Framingham, MA (MSAD)||257.71||214.26||297.81||n/a||15.56%|
|Charleston-North Charleston, SC||286.12||203.02||350.86||n/a||22.63%|
|Chicago-Naperville-Arlington Heights, IL (MSAD)||238.59||160.39||212.13||12.47%||n/a|
|Colorado Springs, CO||260.04||216.12||322.86||n/a||24.16%|
|Detroit-Dearborn-Livonia, MI (MSAD)||208.17||113.78||195.5||6.48%||n/a|
|El Paso, TX||195.42||168.87||194.31||0.57%||n/a|
|Fort Lauderdale-Pompano Beach-Deerfield Beach, FL (MSAD)||353.11||177.84||323.62||9.11%||n/a|
|Gary, IN (MSAD)||186.88||156.55||199.97||n/a||7.00%|
|Grand Rapids-Wyoming, MI||185.71||140.18||233.06||n/a||25.50%|
|Greensboro-High Point, NC||168.12||145.36||181.64||n/a||8.04%|
|Hartford-West Hartford-East Hartford, CT||173.67||145.42||155.4||11.76%||n/a|
|Honolulu ('Urban Honolulu'), HI||196.75||175.26||252.1||n/a||28.13%|
|Kansas City, MO-KS||201.06||164.64||240.32||n/a||19.53%|
|Lake County-Kenosha County, IL-WI (MSAD)||209.07||139.74||182.71||14.43%||n/a|
|Little Rock-North Little Rock-Conway, AR||191.22||182.23||208.62||n/a||9.10%|
|Los Angeles-Long Beach-Glendale, CA (MSAD)||277.51||166.66||286.23||n/a||3.14%|
|Louisville/Jefferson County, KY-IN||200.59||187.59||247.67||n/a||23.47%|
|Miami-Miami Beach-Kendall, FL (MSAD)||419.74||214.82||371.94||12.85%||n/a|
|Milwaukee-Waukesha-West Allis, WI||236.36||191.05||245.3||n/a||3.78%|
|Minneapolis-St. Paul-Bloomington, MN-WI||265.01||189.92||276.87||n/a||4.48%|
|Montgomery County-Bucks County-Chester County, PA (MSAD)||213.75||185.07||216.31||n/a||1.20%|
|Nassau County-Suffolk County, NY (MSAD)||302.49||238.37||291.29||3.84%||n/a|
|New Orleans-Metairie, LA||264.68||223.5||300.78||n/a||13.64%|
|New York-Jersey City-White Plains, NY-NJ (MSAD)||272.9||219.19||265.06||2.96%||n/a|
|Newark, NJ-PA (MSAD)||268.17||207.25||246.24||8.91%||n/a|
|North Port-Sarasota-Bradenton, FL||344.4||161.99||312.37||10.25%||n/a|
|Oakland-Hayward-Berkeley, CA (MSAD)||308.88||163.42||332.55||n/a||7.66%|
|Oklahoma City, OK||201.9||192.89||255.59||n/a||26.59%|
|Omaha-Council Bluffs, NE-IA||201.29||181.37||238.67||n/a||18.57%|
|Oxnard-Thousand Oaks-Ventura, CA||284.67||172.37||271.39||4.89%||n/a|
|Philadelphia, PA (MSAD)||239.9||206.85||266.91||n/a||11.26%|
|Riverside-San Bernardino-Ontario, CA||274.14||127.76||235.18||16.57%||n/a|
|Salt Lake City, UT||354.7||263.17||421.7||n/a||18.89%|
|San Diego-Carlsbad, CA||298.4||189.49||315.28||n/a||5.66%|
|San Jose-Sunnyvale-Santa Clara, CA||289.42||198.34||368.78||n/a||27.42%|
|Seattle-Bellevue-Everett, WA (MSAD)||298.92||205.51||390.46||n/a||30.62%|
|Silver Spring-Frederick-Rockville, MD (MSAD)||280.18||206.66||264.59||5.89%||n/a|
|St. Louis, MO-IL||212.21||174.63||224.58||n/a||5.83%|
|Tacoma-Lakewood, WA (MSAD)||296.1||182.69||318.65||n/a||7.62%|
|Tampa-St. Petersburg-Clearwater, FL||313.95||171.68||301.46||4.14%||n/a|
|Virginia Beach-Norfolk-Newport News, VA-NC||275.23||207.14||248.03||10.97%||n/a|
|Warren-Troy-Farmington Hills, MI (MSAD)||206.78||123.83||217.5||n/a||5.18%|
|Washington-Arlington-Alexandria, DC-VA-MD-WV (MSAD)||284.45||205.72||298.67||n/a||5.00%|
|West Palm Beach-Boca Raton-Delray Beach, FL (MSAD)||322.66||153.68||301.57||6.99%||n/a|
|Wilmington, DE-MD-NJ (MSAD)||216.7||165.03||190.75||13.60%||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