Wondering if the income needed to buy a home in the top 50 metro areas is starting to decline? Hint: Not yet.

Wondering if the income needed to buy a home in the top 50 metro areas is starting to decline? Hint: Not yet.

Home Values Fully Recovered in All Top 100 Housing Markets

Finish Line! All of the top 100 metro areas have achieved full recovery of previous "boom-era" peak home values

September 9, 2021 - HSH.com releases today its final Home Price Recovery Index, a quarterly analysis of changing home values in the nation’s top 100 metropolitan housing markets. Developed by HSH, a premiere consumer destination for mortgage information and rate shopping since 1979, the HPRI reveals markets with home prices at or above previous "boom era" peaks and those that have not yet completely recovered lost value.

The latest study examines home values in the largest 100 metropolitan areas from 1991 through the second quarter of 2021. A string of surging home values over the two years has lifted the remaining market over its previous high-water mark, joining the other 99 who already completed the journey. The process of recovery in lost home values in the Bakersfield, CA metro area took nearly 15 years.

HSH.com’s "Home Price Recovery Index" uses the Federal Housing Finance Agency's (FHFA) Home Price Index for insight on housing market values. By this reference, 98 of the 100 largest metro areas saw quarter-to-quarter increases in home values, with only the San Francisco-San Mateo-Redwood City, CA metro (-1.62%) and the El Paso, TX (-1.56%) showing any quarter-to-quarter softness. As the HPRI data is comprised solely of loans purchased by Fannie Mae or Freddie Mac, it is very likely that the data doesn't represent the San Francisco market very well, as the median price of a home sold in the Sane Francisco metro area in the second quarter was $1,385,000.

With inventories of homes available to purchase very thin, home prices continued their steep climb in the second quarter of 2021. Compared to a year ago, all but three of the top 100 metros tracked saw double-digit home value increases that ranged as high as an astounding 41.11% in the Boise City. ID, metro area. The Austin-Round Rock-Georgetown, TX sported a 35.14% increase and more than 20 other metros say 20%+ year-over-year increases.

It has taken nearly 15 years from the mid-aughts real estate boom and subsequent bust for all 100 metros to return to the high values they once attained. Over the full cycle, not all housing markets boomed and busted; some experienced only relatively mild gains and declines, while others saw unsustainable increases followed by values plummeting. Most areas peaked in the 2005-2007 period, and those that did decline mostly bottomed by 2011 or so. After bottoming, home values were again lifted by the longest economic expansion in U.S. history, broken only by the COVID-19 pandemic, which seemed only to help spur home prices to new record highs.

HSH.com’s "Home Price Recovery Index" uses the Federal Housing Finance Agency's (FHFA) Home Price Index for insight on changes to housing market values.

Areas with greatest pricing recovery Percent value now above “boom era” price peak
1. Austin-Round Rock-Georgetown, TX 161.17%
2. Denver-Aurora-Lakewood, CO 138.95%
3. Boise City, ID 123.23%


It is important to note that many markets have seen significant price recoveries since hitting their bottom values, with a number of metros needing to more than double their low water mark to achieve recovery; these markets lost 50% or more of their peak value in the subsequent housing bust. In fact, the Bakersfield (CA) metro area needed to more than double its low value mark in 2011 to return to highs set in late 2006.

Important takeaways

  • Record low mortgage rates have stoked gains in home values. All but six markets are now more than 10% above last-boom highs. Last year at this time, it was only 68 of 100 that were more than 10% above prior peaks.

  • Among the most recovered group, there were two new entrants this quarter, as Salt Lake City, UT moved up to the #9 slot (from #11) and Grand Rapids-Kentwood, MI (moving up to #10 from #12). New metros moving in to the top group means some moving out, and the Houston-The Woodlands-Sugar Land, TX and San Francisco-San Mateo-Redwood City, CA metros vacated spots to make room for the new entries.

See the full analysis here: https://www.hsh.com/finance/real-estate/home-price-recovery.html

Homeowners interested in seeing how their home's value has changed over time are encouraged to use HSH.com's free “Home Value Estimator.” The tool allows users to select their market from 100 metropolitan areas and enter the time frame in which they've owned their home; changes in the home’s value during this ownership period are revealed and a current price estimate based on housing cost trends in the selected metro area is provided.

Retiring the HPRI
This will be the final update to HSH's Home Price Recovery Index. Six years ago, when we started tracking home price changes with these measures, we knew at some point there would be no more "recovery" in our Home Price Recovery Index, and so it's time to retire the series.

We'll continue to track the "most recovered" group for a couple of quarters yet, and of course, HSH's Home Value Estimator (MyHPI) will continue to be updated, so you can track changes in your favorite metro as we go.

At the same time, we're pleased to introduce a new means of following changes in home values. Our Home Value Tracker uses a different set of FHFA data which includes both repeat purchases and refinances, so it's a very robust data set. However, since there is no "refinancing season", the data is not seasonally adjusted and so can be more volatile from quarter to quarter.

That said, Home Value Tracker covers more than four times the metro areas as did our HPRI covering over 400 metros in all, and provides five value-change reference points -- change from last quarter, two quarters ago and one, three and five years ago. The new HVT contains two tables showing home values changes in the metros with the 10 largest and 10 smallest home price changes over the last year, and a unique home value lookup tool so you can see your local market's changes over those time points, too.

We're also rolling out a new custom-time-period tracking tool: Home Value Tracker - MyHVT, where you can see what's happened to home values in any of 400+ metros over any time frame you like. See what's happened while you've owned your home (or review any other period) from 1995 to now.

About HSH.com
Since 1979, HSH.com has been a trusted mortgage resource for consumers seeking independent, objective and expert-level mortgage information, forecasts and data. HSH.com offers unique analysis, calculators, tools and content to help demystify first mortgages, home equity loans and lines of credit, reverse mortgages and more. HSH.com empowers homebuyers and homeowners to fully understand their home financing choices and provide opportunities for them to engage with partners to execute their transactions.

Website: https://www.hsh.com
Twitter: @HSHassociates
Facebook: https://www.facebook.com/HSHassociates/

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