In the wake of the 2007 housing market crash, America’s homeowners lost more than 6 trillion dollars of equity in their homes — about six times the gross domestic product of Australia, according to CNN Money.
Millions saw their net worth plummet, lost their retirement dreams, couldn’t afford tuition for their children and watched their home value decline even more by forgoing upkeep.
According to Bloomberg, some 9.3 million owners lost their homes to foreclosure and short sales, in part because they owned more than their homes were worth.
Now, rising prices are finally restoring lost equity to owners who have been frozen in place, unable to sell, frozen out of lower interest rates or unable to refinance. According to CoreLogic, some economists now believe that either this year or next that national median home values will reach the peak levels of 2007.
Because there is no such thing as a national housing market, such “national” medians are only statistics. In local markets where homeowners live, the picture isn’t so simple. Millions of homes are still far from recovery. Others are making up for lost time quickly, thanks to robust demand.
At Homes.com, we’ve been tracking the rebound of the nation’s housing values on a market-by-market basis each month for more than three years. By September, 170 of the nation’s largest 300 markets, or 57 percent, had achieved full price recovery, including 53 of the top 100 markets.
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Our goal is not to keep a national scorecard of rebounded markets, but to help homeowners understand how their market is doing on the road to recovery. Perhaps the most important takeaway from our data is simply this — where you live has a great deal to do with how quickly your home is recovering value.
Here are a few important points to keep in mind when speaking with homeowners:
Strong local economies create strong local housing markets
By September 2013, only 27 percent of the top 300 markets had reached their peak prices. Many were the beneficiaries of an energy boom from Texas to the Dakotas created a strong demand for housing, and home values rose quickly.
Markets — such as Shreveport, Louisiana; Lubbock, Texas; Wichita Falls, Texas; Fargo, North Dakota; Midland, Texas; and Anchorage, Alaska — all rose above their peak prices ahead of markets elsewhere. Over the past several years, price recovery has differed significantly by region.
Local markets create regional patterns
Among the nation’s 100 largest markets, western markets continue to lead the recovery. All of the other top-performing mid-sized markets were also in the west. The greatest number of markets losing value at the end of the third quarter was in the south and the midwest.
How much value markets lost determines how quickly they return to peaks
Markets — and homes — that lost the most value during the housing crash have the longest road back to recovery. Of the top 100 markets, those with minimal price declines (0 percent to 10 percent) have rebounded with an average of 109 percent.
Of the moderate price decline markets (10 percent to 20 percent), the average rebound percentage is at 102 percent of the prior peak price. Of the severe price decline markets (20 percent or more), the average rebound percentage is 84 percent.
Three markets that suffered severely from foreclosures — Las Vegas-Henderson-Paradise, Nevada; Stockton-Lodi, California; and Cape Coral-Fort Myers, Florida — today trail our list of top recovering markets. Not one of these three has recovered 75 percent of its peak value.
Despite the forecasts that we are close to returning to peak value as a nation, 46 percent of our largest markets are not there yet. Even in markets where median prices have reached full price recovery, nearly half of the homes are still below their peak values. Some homes, some markets and some regions will take longer than others to return to peak health.
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That’s why it’s so important that the recovery strengthen in former foreclosure markets and the northeast where homeowners are still waiting for relief. Although progress has been made, it is too soon to declare victory.
David Mele is the president of Homes.com. Follow Homes.com on Twitter @Homesdotcom or @HomesPro.
