Trulia: Just One-Third of U.S. Properties Past Pre-Recession Peak

For all the talk about soaring home prices and recovery from the Great Recession, Trulia Chief Economist Ralph McLaughlin has a more sober assessment.

In a new blog from Trulia, San Francisco (https://www.trulia.com/blog/trends/home-value-recovery-2017/), McLaughlin noted that only one-third of homes have surpassed their pre-recession peak value. Those that have are being helped by increasing incomes, strong population growth and low vacancy rates in their respective markets. But McLauglin said many gaps remain.

“When it comes to the value of individual homes, the U.S. housing market has yet to recover,” McLaughlin said. “What’s more, the geography of the housing market recovery has been uneven.”

For example, while 98% of homes in places such as Denver and San Francisco have reached their pre-recession peaks, fewer than 3% of homes in Las Vegas and Tucson, Ariz., have done so.

Trulia studied property-level home value recovery nationally and in the 100 largest U.S. metro areas by comparing the nominal value of each home as of March 1 to the nominal peak value of that home prior to the onset of the Great Recession (Dec. 1, 2009). The study found the majority of homes in the U.S. have not recovered to their pre-recession peak, but several markets have either fully recovered, or not recovered much at all.

Key findings:

–Nationally, just 34.2% of all homes have recovered to their pre-recession peak value.

–Among the largest 100 metros, the share of homes that have recovered range from less than 3% in Las Vegas, Tucson and Fresno, Calif., to more than 94% in Denver, San Francisco and Oklahoma City.

–Markets with the strongest income growth between December 2009 and January 2017–such as San Francisco, Seattle and San Jose, Calif.–have seen the largest share of homes pass their pre-recession peak values, while markets with the weakest income growth–such as Las Vegas, Daytona Beach, Fla., and Worcester, Mass.–largely remain below their peak values.

“You’re more likely to encounter a home in the U.S. that hasn’t recovered than has,” McLaughlin said. “After the recession ended in June 2009, the housing market continued reeling from the foreclosure crisis, sending the share of recovered homes to a low of just 7% in April 2012. Since then, the recovery has been slow and steady, climbing by about 5 to 6 percentage points each year. At this rate, we won’t see 100% of homes reach their pre-recession peak until approximately September 2025.”

McLaughlin said across the largest metropolitan areas, the recovery has been limited to a mix of economically booming metros in the West and metros in the South that were relatively unaffected by the housing market downturn. “Outside of these metros, the recovery looks very different, as the majority of zip codes with at least half of homes recovered are limited to the U.S. heartland and the Pacific Northwest.”

McLaughlin said income growth seems to be primary differentiator when it comes to explaining why some metros are more recovered than others. “Population growth and post-recession vacancy rates play a secondary role while job growth is likely affecting the recovery indirectly through its correlation with income,” he said.