The housing markets across the U.S. have wildly fluctuated from peak-price highs near 2005, 2006, 2007, or 2008 to peak lows reached in 2009, 2010, 2011, or in more recent years–depending upon region.
The Credit Crisis has impacted housing price movements somewhat like a Yo-Yo toy, swinging from peak highs to peak lows in short periods of time.
Some housing regions have rebounded quite strongly, while other metropolitan regions are still struggling to get closer to their once peak-price highs of the past decade or so.
Since the official start of the Credit Crisis in the summer of 2007, home prices and family’s overall net worth have either significantly decreased or increased as a result of local economic trends and home price swings.
For most Americans, the equity in their primary owner-occupied home typically represents the bulk of their family’s overall net worth.
In some regions, home prices fell 20% to 50%+ in value within the first few years of the Credit Crisis. Within many of these metropolitan regions, home prices have rapidly increased at double-digit rate percentage gains of 10% to 20%+ in areas like Phoenix, Los Angeles, San Francisco, and Seattle.
Yet, many metropolitan regions still have not reached their historic peak price highs reached as far back as a decade ago in 2006 in spite of recent 5%, 7%, or 10%+ annual price gains as compared with previous years.
The Top 10 Recovered Metropolitan Housing Regions
The Federal Housing Finance Agency’s (FHFA) House Price Index (HPI) shows that home prices nationwide increased by 5.8% in the 4th quarter of 2015.
Using a combination of data from the HPI index as well as from HSH.com, let’s take a look at which housing markets have boomed or busted the most from the market peaks or highs to their market busts or lows, especially during the ongoing Credit Crisis years (2007 to 2016+).
Region* Peak Value Bottom Value Current Value % Above Peak
1. Denver, CO $277,210 $256,920 $413,860 49.29%
2. Austin, TX $270,260 $260,750 $399,590 47.85%
3. Houston, TX $201,000 $194,720 $284,870 41.73%
4. Dallas, TX $172,700 $165,330 $243,290 40.87%
5. San Francisco, CA $276,620 $215,900 $372,360 34.61%
6. Fort Worth, TX $168,800 $161,060 $217,190 28.67%
7. Pittsburg, PA $180,990 $176,840 $227,700 25.81%
8. Nashville, TN $225,430 $198,090 $280,150 24.27%
9. Buffalo, NY $147,660 $146,690 $182,520 23.61%
10. San Antonio, TX $216,400 $199,130 $263,120 21.59%
* The Region designation includes the entire metropolitan region around the listed key cities above. Individual cities like San Francisco (#1 most expensive city nationally, per various reports) have significantly higher home prices than the much broader metropolitan regions.
Declining Wealth and Income Numbers
Most people are interested in investing in real estate, stocks, and other income-generating investments, so they’ll have more consistent monthly and annual income in order to cover their expenses during their working age years and their retirement age years.
Sadly, more Americans today are working full-time much later in life, partly since they don’t have sufficient income to cover their expenses.
Let’s take a look at some basic eye-opening numbers as it relates to income, working hours, overall net worth, and other economic numbers for Americans in recent years:
* According to the Current Population Survey publication, the full-time working Baby Boomer (born between 1946 and 1964) is still averaging 42.4 hours per week of work.
* Per various economic data sources, the average Baby Boomer has an average annual disposable income amount of $24,000 (net income available after taxes), or $2,000/month.
* The Pew Research group reports that the average retirement-age American today has created a net worth near $230,000 with almost $150,000 of that total amount placed into some type of retirement account.
* According to a wide number of investment groups or publications like Dalbar (a leading national financial services market research firm) and numerous other sources, the average stock investment return over a 20 or 30-year time period was somewhere between 2.1% (during the years of 1991 and 2011) and 3.7%. Yet, some individual stocks have generated 7% + or even double-digit returns over several years or decades.
* If we use the higher 3.7% annual rate of return for stocks, the average $150,000 retirement fund for Baby Boomers would generate an annual income return of $5,550 per year, or just $462.50 per month.
* Social Security reports that the average income for retired workers in the year 2013 was $1,306 per month, or upwards of $15,672 per year.
* The monthly combination of a Baby Boomer’s average monthly income from their $150,000 retirement account which generates annual yields of 3.7% ($462.50 per month), and the average Social Security income of $1,306 per month is equivalent to a total of $1,768.50 per month.
* According to apartmentlist.com, the median price for a 2-bedroom apartment in the U.S. currently is $1,330, while 1-bedroom units are priced at $1,180 per month. After adding expenses for utilities, food, medical bills, travel, gas, and other basic necessities, that same $1,760.50 to $2,000 per month in income doesn’t go too far with covering expenses.
Real estate has historically proven over many decades to be the most consistent investment strategy for long-term growth and income generation potential.
At some point, savvy investors will probably learn that it is better to let their money work hard for them by way of creative real estate investment strategies instead of working hard for their money.
Just like a Yo-Yo, markets can quickly turn positive and skyward sooner than we think if we can keep holding on during the bouncy ride!