Accordidng to RealEstate.com, the housing market lost $9 trillion dollars in value during the recession, and now has gained about 1/3 of it back. Here is an explanation of their methodology:
We calculated the total value of the housing market for three separate months – the peak (March of 2007), the trough (Nov of 2011) and the latest (June of 2012). We then calculated the theoretical value of the housing market during each of these periods, by multiplying the average price of a sold home by the estimated number of housing units, using numbers supplied by the U.S. Census Bureau.
The article then goes on to say that the numbers are not seasonally adjusted, Census data may be less than accurate, and anyway all real estate is local so "mileage may vary.'' (Read the complete article at www.RealEstate.com) Fair enough, but even if our mileage varies, this is good information.
Here in the Raleigh Triangle area, our peak and our trough coincide pretty closely with the dates given by RealEstate.com. But not much of that initial $9 trillion dollar loss was ours. Strangely enough, we were protected by the bursting of a previous bubble -- the tech bubble, in 2000. That event hit our local economy hard. IBM laid off, Nortal began dying, and Alcatel left town. The job losses meant that people moved away, and our MLS listing inventory went up. As you can see from the graph below, homes in Wake County increased in value only modestly in the early years of the decade, and then lost about 10% of their value between 2006 and 2011. Other states would kill for our numbers! (Graph courtesy of the T.A.R.R. Report.)
Losing 10% of a home's value, though painful for the seller, is not nearly has bad as losing a third, a half, or more. I have a client who moved from Flint, Michigan. He sold his home for 1/3 of its value at the peak -- and he was grateful to have found a buyer at all.
However, while we count our blessings, it does not behoove us to be arrogant. Real estate is local, but the market doesn't function in isolation. One reason for our current relative prosperity in the Triangle is because people are moving here from other parts of the country. If they can't sell their home there, they can't buy a home here.
Like it or not, the bell tolls for us, too.
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