How Much Have Prices Rebounded Since the Housing Bubble Burst?
Most Americans these days have a certain degree of PTSD when it comes to even passing mentions of the R word. After all, the Great Recession worked its dark tendrils into the lives of just about everyone. Nearly 9 million people lost their jobs. Almost 10 million homes were foreclosed upon or underwent a short sale. Even those lucky to hold on to their jobs and homes often went without raises and bonuses for years, and watched their retirement accounts dwindle.
And now, with the recent stock market drops and escalating fears that the COVID-19 virus is plunging the world into another recession, folks are beginning to experience some ugly déjà vu. Shudder.
So it seems like a good time to take a big step back to determine just what happened to the housing markets in America’s top cities in the aftermath of the worst real estate crash since the Depression. Because the silver lining to the previous housing bust were bargain-basement home prices—if you were able to scrape up the funds to become a buyer back then, of course. Those fortunate enough to weather the storm and purchase a home at the bottom of the market basically won the equivalent of the real estate jackpot.
After 127 months straight of economic growth and surging demand for housing, home prices in most of the country have reached or exceeded their pre-recession peaks. The realtor.com® data team set out to determine just how much prices rose from the trough to the pinnacle in the nation’s largest metropolitan areas.
So where were the increases the highest?
“Cities where we’re seeing the strongest price rebounds are where high-wage jobs like tech, health care, and financial services have grown the most during this past decade,” says realtor.com Senior Economist George Ratiu. They include Dallas, where home prices skyrocketed as more companies have moved in—attracting workers from around the world jockeying for good places to live.
There have also been huge price gains in cities that fell the furthest—like Las Vegas and Miami, where crazy overbuilding coupled with rampant real estate speculation led to the biggest of busts. They had nowhere to go but up. In Las Vegas, aka foreclosure central, median sale prices have since risen 121.4% from early 2012 through the top of the market in November 2019.
To figure out where prices have increased the most, the data geeks of realtor.com looked at the median home sale prices in the 11 largest metropolitan areas* at the bottom of the market in February 2012. (While economists say the Great Recession ended in mid-2009, real estate prices didn’t bottom out in most markets until 2012.) Then we compared those lows to each city’s corresponding post-recession peak to see which places saw the highest percentage change.
Ready to find out just how much you could have made if you’d only bought way back then?
New York, NY
Median home price February 2012: $340,000 Highest month (July 2019) median home price: $457,500 Percentage increase: 34.6%
Any New Yorker will remember the empty construction sites, expanses of dirt, and partly laid foundations that pocked the city after the housing crash. But no more.
The post-recession years of 2014 and 2015 are what real estate appraiser Jonathan Miller of Miller Samuels calls “peak new development.” Cranes dotted the city skyline like pigeons on Central Park benches. Thousands of luxury condos and apartments were erected.
During the crash, foreclosed single-family homes with overgrown yards and boarded-up windows became familiar sights in poorer, predominantly minority communities in Southeast Queens, the South Bronx, and Southeastern Brooklyn. Upper Manhattan also took a hit. Its East Harlem neighborhood, which saw home prices increase a staggering 499.6% from 1996 to 2006, was among the neighborhoods that saw the steepest drops when the bubble popped.
But prices for townhomes and brownstones have ballooned back up by more than 170% since 2009, according to Property Shark data.
This seven-bedroom townhouse in Harlem, for example, sold for $3.4 million, five years after it was picked up for $550,000.
Astronomically high prices are now the norm again in all five boroughs of New York City. Plagued by a dearth of affordable housing in the wake of the recession, buyers have been moving farther and farther out from central Manhattan. That’s resulted in fast-rising real estate prices in outlying neighborhoods well beyond their previous 2008 highs.
In former working-class enclaves like Ridgewood, on the border of Queens and Brooklyn, this three-bedroom, single-family home is now on the market for $799,000; it sold for $380,000 in 2008 before the neighborhood got trendy with hipsters priced out of Brooklyn’s Greenpoint and Williamsburg.
“It’s the [neighborhoods] that haven’t already been established that saw the most growth,” says Miller.
Los Angeles, CA
Median home price February 2012: $365,000 Highest month (July 2019) median home price: $675,000 Percentage increase: 84.9%
Los Angeles’ real estate market is back and then some. Thank the strong economic recovery in the City of Angels, which resulted in a high concentration of well-paid buyers who have been driving up the cost of housing in recent years.
Prices are especially steep in the wealthier, westside neighborhoods now known as Silicon Beach, which includes Santa Monica, Marina Del Rey, Playa Vista, and Manhattan Beach. Home to Snapchat, Google, and other tech companies, areas like Venice have seen prices skyrocket. In Marina Del Ray, a five-bedroom, four-bath home that was sold for just over $2 million in 2011 is now on the market for just under $3.5 million. This one-bed, one-bath condo in the same neighborhood was sold for $579,000 in 2014—and is now listed at $850,000.
But, as is the case in many other U.S. cities, the far-flung suburbs were hardest-hit. Inland areas like Palmdale and Lancaster saw some of the steepest declines in the new housing developments that went up as far as the eye could see leading up toward the crash. That’s where prices still haven’t fully recovered.
Statewide, home prices fell 42% from the pre-recession peak to the bottom of the market, according to an analysis of CoreLogic data.
“California was really at the forefront of the housing crash,” says realtor.com’s Ratiu.
Median home price February 2012: $180,000 Highest month (July 2019) median home price: $261,000 Percentage increase: 45%
Illinois had one of the greatest nosedives in home prices during the Great Recession—across the sprawling Chicago metro they declined by 33% at the bottom of the crash, according to an analysis of CoreLogic data. And while much of the region has been on a multiyear home-buying spree since the recovery kicked in, some parts of the Chicago metro are still lagging behind.
The suburban McMansion communities that went up like wildfire in the ’90s and early 2000s have been especially slow to recover. Demand simply hasn’t been as strong there. In South Barrington, IL, this sprawling four-bedroom that hit the market for $725,000 in 2009 is now listed for just $589,000.
And while the rest of the Windy City metro market has cooled slightly after a yearslong buying frenzy, the once gloomy West Loop is still roaring after a multiyear, post-recession surge. The developers who first started transforming the centrally located neighborhood with amenity-laden, millennial-focused condos are still selling million-dollar-plus abodes.
Median home price February 2012: $161,000 Highest month (June 2019) median home price: $285,000 Percentage increase: 77%
Home values have surged substantially in Dallas over the past seven years—largely due to the metro’s transformation into a much more diverse, economic powerhouse.
After the housing bubble burst just over a decade ago, plenty of builders went out of business and an excess of homes sat empty without buyers. But the market normalized again fairly quickly, according to local building consultant Ted Wilson of Residential Strategies.
Within the past few years, all kinds of companies are moving, expanding, and opening up in the Dallas–Fort Worth region. Toyota opened a U.S. headquarters outside of the city in 2017. And all of those well-paid workers moving in need places to live, causing prices to shoot up in recent years.
In desirable North Dallas, a just-sold two-bedroom home that was listed for $246,000 in 2009 went on the market for $325,000. That’s not uncommon as the area continues to boom.
Median home price February 2012: $166,000 Highest month (June 2019) median home price: $253,000 Percentage increase: 52.40%
Like Dallas and much of the rest of Texas, Houston escaped the worst of the Great Recession. Sure, there were plenty of foreclosures. But unlike places like Florida and Nevada, the state never saw the mobs of frenzied investors artificially inflating costs to buy homes in the run-up to the recession. So things bounced back faster.
“Other parts of the country saw amazing price increases in the run-up to the subprime debacle. Texas really didn’t participate,” says building consultant Wilson.
Houston wasn’t just lucky. The city has shifted its economic focus away from oil and gas—though the industry is still a huge presence—toward health care, construction, and administrative services. The job growth is up, luring more out-of-towners to settle here.
So it’s no surprise that single-family home sales have been on the rise. They jumped nearly 10% from last year, according to the Houston Association of Realtors. The majority of those purchases were in the midrange, from $150,000 to $500,000.
The neighborhoods surrounding Hobby Airport, considered a haven for first-time home buyers, have seen steady increases in home values. This Glenbrook Valley four-bedroom house is on the market for $309,900, a 76% increase over its 2014 asking price.
Median home price February 2012: $200,000 Highest month (July 2019) median home price: $275,000 Percentage increase: 37.50%
The City of Brotherly Love has done a 180-degree turn from the dark days of the recession. The former industrial city has been making a comeback with a stronger economy, a growing population, and fewer vacant homes. Bidding wars are common, and buyers often have to submit several offers before getting a contract.
But unfortunately for buyers who picked up a home at the bottom of the market, they’re not seeing the same kinds of high returns as in other parts of the country. That’s because prices didn’t rise as much in the run-up to the bust as the city was still struggling. So they didn’t have as far to fall.
The parts of town that have seen the biggest price jumps are the ones that were considered less desirable a decade ago. They’re neighborhoods of older, brick row homes and newer condos that are now considered “up and coming” such as Point Breeze, Kensington, and Fishtown.
Median home price February 2012: $323,000 Highest month (July 2019) median home price: $435,000 Percentage increase: 34.70%
When the housing bubble burst, home values didn’t fall off a cliff in DC. After all, the nation’s capital always has a steady stream of government employees, lobbyists, and politicians moving in and out. But as in many cities, predominantly minority neighborhoods were affected the worst.
Overall, the DC metro area’s real estate market has seen steady gains in the recovery, especially over the past year or so, with the drop in interest rates, employment gains, and the upcoming arrival of Amazon’s second headquarters all increasing demand for homes.
In Virginia’s Arlington County, where Amazon will be located right across the river from DC, median home prices rose 33% from November 2018—when the company announced its new location—to November 2019. And they’re expected to keep rising over the next few years as well-paid Amazon employees look for nearby homes.
Median home price February 2012: $169,000 Highest month (Nov. 2019) median home price: $305,000 Percentage increase: 80.5%
South Florida was one of the epicenters of the housing apocalypse, a sun-drenched poster child for overdevelopment and subprime mortgages. Everyone from lawyers and stockbrokers to exotic dancers and busboys seemed to heedlessly jump onto the real estate speculation train.
When the market bottomed out, there were moldy, vacant homes on nearly every block. Statewide, home prices plunged a whopping 50% from their pre-recession highs to the bottom of the market, according to an analysis of CoreLogic data
While the market for single-family homes has met or expanded beyond mid-aughts peak prices, many condos have not fully rebounded to their former high price points. And it doesn’t look like the developers have learned their lessons. A new, post-recession group of luxury condo towers has been going up on the water since 2013 and 2014.
“South Florida is boom or bust,” says Jack McCabe, CEO of Florida-based McCabe Research & Consulting. “Things here are either rapidly appreciating or we’re overbuilding and rapidly declining.”
This two-bedroom condo with water views in the Brickell neighborhood(just south of downtown Miami) was sold for $505,000 in 2006, a year after it was built. It was listed for $200,000 in 2012—and now it’s back on the market for $440,000.
Median home price February 2012: $161,000 Highest month (June 2019) median home price: $260,000 Percentage increase: 61.50%
Atlanta was devastated by the Great Recession: About 1 in 10 jobs was lost while around 250,000 homes were foreclosed upon. Construction came to a screeching halt in the northern exurbs of the sprawling city. But fast-forward just over a decade and Hotlanta is back.
Neighborhoods surrounding the Beltline, a former railway corridor encircling the city that is currently being transformed into hiking and biking trails, have quickly made up for lost values over the past couple of years. In Adair Park, a neighborhood right near the recently completed section of the 3-mile westside trail, this four-bedroom, single-family home is asking nearly four times its 2014 price. It’s listed at $475,000.
“Everybody is following the Beltline,” says Ryan Sconyers, a Realtor® with Graham Seeby Group. “It’s turned into gangbusters real estate-wise.”
Median home price February 2012: $296,000 Highest month (June 2019) median home price: $496,500 Percentage increase: 67.70%
The Boston metro area did see some steep price corrections when the housing market crashed. But the area, so rich in high-paying academic, technology, and financial jobs, has grown substantially in the years since. The population has exploded 12.4% since 2010.
As housing demand has increased, so have home values, swelling well beyond their pre-recession highs. For instance, in Brookline, MA, a stable suburb that was one of the last neighborhoods to drop in value and the first to come back, this three-bedroom, two-bathroom condo was last sold in 2007 for $595,000. It’s now asking nearly $1.2 million.
“In Boston, the average sale price has gone through the roof,” says Brookline associate real estate broker Jayne Friedberg of Coldwell Banker Residential Brokerage. “Those price points are way over what they were pre-recession.”
San Francisco, CA
Median home price February 2012: $430,000 Highest month (May 2018) median home price: $928,000 Percentage increase: 115.80%
With a huge influx of high-paying tech jobs—600,000 to 700,000 new positions since 2010—the San Francisco Bay Area is now the priciest real estate market in the United States. During its 2018 peak, median home prices were more than double that of the New York City metro (which includes the suburbs and outer boroughs) and a few hundred thousand dollars higher than in Los Angeles.
“Everything has come back,” says Patrick Carlisle, chief market analyst of the Bay Area for real estate brokerage Compass. “Of course there have been different levels of appreciation depending on where in the metro area.”
In Bernal Heights, adjacent to consistently popular and relatively stable Noe Valley, prices have skyrocketed. This just-sold, four-bedroom Victorian that was purchased for $1,135,000 in 2011 was asking about twice that.
The more expensive homes in longtime desirable places like Noe Valley and Pacific Heights saw values surge 70% in the run-up to the recession. Prices dropped a bit, but many of the well-to-do homeowners were able to avoid foreclosure and weather the economic storm.
Meanwhile, on the outskirts of Alameda and Contra Costa counties, home prices soared up to 170% before the recession This five-bedroom home in Dublin was sold for $1,300,000 in 2005, then $735,000 in 2009. It’s now listed for $1,439,000 and just went under contract.
“In 2015–16 more affordable neighborhoods started to go up faster because things had gotten too expensive so quickly in more affluent neighborhoods,” says Carlisle. “There was a desperate search for, ‘Where can I still afford a home?’”