Special Report

Eight Housing Markets With the Longest Road to Recovery

Location, location, location, it is said, are key to succeeding in real estate. While the value of a single family home nationally may — at the current pace — be about 2.5 years away from a full recovery, in some large urban areas it might take more than 10 years for homes to recover their value.

24/7 Wall St. reviewed home values in the 50 largest core based statistical areas (CBSA) from Corelogic to determine how long it would take for home values to return to their peak values in the aftermath of the collapse of the housing bubble and subsequent recession. These are the housing markets with the longest recovery periods.

Click here to see the eight housing markets with the longest recovery periods.

The housing markets with the longest recovery periods either had especially slow growth rates, particularly large percentage drops in home values, or both. Six of the eight housing markets reviewed, for example, had among the nation’s slowest growth rates over the 12 months through January 2015.

Danielle Hale, director of housing statistics at the National Association of Realtors, suggested why housing values in these markets fell.

“These areas probably had more building and sales and home activity in general during the periods of peak values,” Hale explained. “Therefore, the legacy of the aftermath of the housing crisis is a little bit sharper in these areas than in other areas.”

In all but one of the eight markets that will take the longest to recover, the drop in home values from peak to trough was greater than the 33.8% drop in values nationwide. In the Las Vegas and Riverside areas, home values fell by 58.2% and 50.5%, respectively, both some of the largest such declines.

Hale also suggested why the value recovery might lag in these areas.

“Some of the reasons for the delayed recovery in some of these areas have to do with the overall economy,” Hale offered. “In some of these markets, like the California market for example, Riverside has actually seen some job growth compared to their previous peak.” In other areas such as the Providence and Detroit metro areas, however, “the number of payroll employees has actually not yet eclipsed their previous peak levels.”

Hale noted a link between jobs and the economy of a region and housing. Indeed, 24/7 Wall St. found that value improvements tend to lag a labor market improvement in the areas reviewed.

In the Las Vegas, Orlando, and West Palm Beach metro areas, the unemployment rates were at their lowest in the year housing values peaked. When the unemployment rate peaked in these areas, on the other hand, housing values troughed shortly after.

“There’s a really strong relationship between jobs and the overall economic performance and the housing market,” according to Hale. “Economic performance as reflected in the jobs numbers is really key to understanding what’s going on in the housing market.”

To identify the eight housing markets with the longest estimated recovery periods, 24/7 Wall St. reviewed the number of years current home values in the 50 largest core-based statistical areas (CBSA) would need to reach their respective peaks at their most current annualized growth rate. CBSAs are county clusters identified by the U.S. Census as the cores of major metropolitan areas. Annualized growth rates over the 12 months through January 2015 in the 50 largest CBSAs are from Corelogic. In order to capture a region’s recovery from the housing crisis specifically, we excluded areas where home values bottomed out prior to 2007. We also only considered areas where the estimated time to recovery exceeded four years, well more than the national estimated time to recovery of 2.5 years. Annual unemployment rates from each each year between 2005 and 2013 came from the U.S. Bureau of Labor Statistics (BLS). Five-year estimated median household incomes came from the U.S. Census American Community Survey. All data are as of the most recent period available.

These are the eight areas with the longest housing market recoveries.

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