Most of America’s larges cities haven’t recovered the majority of their lost home value since the Great Recession, according to real estate site Trulia.
But San Francisco roared back gangbusters style, and a look at the other cities riding big recoveries tells us why.
In a report titled “The Housing Recovery That Wasn’t,” Trulia economist Ralph McLaughlin argues that although general U.S. home values are now well above what they were prior to 2009, it hasn’t translated to most individual properties:
These aggregate measures use the average changes in sales prices of homes that sell, and thus don’t necessarily capture how the current value of individual homes compare to their pre-recession peaks. In fact, when we looked at the current values compared to pre-recession peaks, just 34.2% of homes have recovered their value.
McLaughlin instead looked at ups and downs of individual homes in the country’s 100 largest cities:
By comparing the nominal value of each home as of March 1, 2017 to the nominal peak value of that home prior to the onset of the Great Recession (Dec. 1, 2007). If the current value was greater than the pre-recession peak, we considered that home to have recovered.
The Federal Reserve marks the Great Recession as December 2007 through mid 2009, but home prices continued to drop for years after that.
Of the 100 cities studied, McLaughlin claims that only 38 have recovered a majority of their former accumulated value. Some, like Fresno, have recouped as little as 2.5 percent.
But no surprises for guessing that San Francisco is back on track, for better or worse: 98 percent of SF homes are worth more than they were seven and a half years ago, the second highest bounce back rate in the nation, behind only Denver’s 98.7 percent.
Note that Trulia estimates home values via automatic algorithms. Like most computer projections, they’re imperfect.
“Some of the sites had my house at almost $60,000 to $70,000 more than I was selling it for,” a realtor complained to finance site Nerd Wallet in 2015—sums that are pretty small compared to SF housing prices, but more significant elsewhere.
Still, while Trulia’s numbers come with a certain margin of error, comparing which cities came out ahead via the same formula and which didn’t reveals certain patterns.
Consider some of the other cities with similar home value spikes to San Francisco’s: San Jose (84.3 percent), Portland, OR (90.3), Charlotte, NC (71), Raleigh, NC (87.6), Austin, TX (85), Dallas, TX (92.5), Denver, CO (98.7), Nashville, TN (94.1), Seattle, WA (80.5), and Grand Rapids, MI (76.6).
All cities that have marked a recent upsurge in jobs in the technology sector. In fact, all but Portland made Forbes’ rankings of cities creating the most tech jobs this year.
Of course, this not the only factor in play—five other cities on that Forbes list, including Detroit, MI and Kansas City, MO, fared poorly on the Trulia rankings, while some communities with no notable tech industry found other ways to recover.
Still, for anybody wondering what San Francisco or Austin or Raleigh has on New York (26.7 percent), which really only started its own tech sector expansion less than three years ago according to Inc Magazine, one answer looms larger than the others.
- The Recovery That Wasn’t [Trulia]
- Great Recession [Federal Reserve]
- Median Sale Prices [Fed St Louis]
- Don’t Rely on Estimates [Nerd Wallet]
- Cities Creating Tech Jobs [Forbes]
- NY Tech Scene Nothing Like You’d Expect [Inc]