The year 2008 was a turbulent one for the global economy, especially for the housing market. The subprime mortgage crisis, which began in 2007, triggered a wave of defaults, foreclosures, and plummeting home values across the United States and other countries. The impact of the crisis was felt not only by homeowners and borrowers, but also by financial institutions, investors, and governments that had exposure to the risky mortgage-backed securities that fueled the housing boom.
But how much did housing prices actually drop in 2008? According to various sources, the answer varies depending on the data source, the time period, and the geographic area. Here are some of the estimates from different sources:
- National Association of Realtors (NAR): The median existing-home price in the U.S. fell by a record 12.4% in the fourth quarter of 2008 compared to the same period in 2007. This was the biggest quarterly decline since NAR began tracking prices in 1979. For the whole year of 2008, NAR reported that the median existing-home price dropped by 9.5% to $197,100, compared to $217,900 in 2007.
- S&P/Case-Shiller Home Price Indices: Home prices fell by 18.2% in November 2008 compared to November 2007 in 20 major metropolitan areas. This was the largest annual decline in the history of the index, which dates back to 1987. For the whole year of 2008, the index showed a decline of 15.3% compared to 2007.
- Nationwide Building Society: House prices fell by 15.9% in 2008, the biggest annual drop since Nationwide began publishing its index in 1991. December saw a 2.5% fall in prices – the second biggest monthly fall of the year after May, when prices were down 2.6%.
- Investopedia: House prices fell by an average of 10% across developed countries in 2008, with some countries experiencing much steeper declines. For example, Ireland saw a drop of 18%, Spain saw a drop of 16%, and Australia saw a drop of 12%.
- Statistics Canada: New house prices fell by 3.1% year over year nationally in August 2009, following a peak in September 2008. The decline was mainly driven by lower prices in Western Canada, especially Alberta and British Columbia. For example, Calgary saw a drop of 11.4% and Vancouver saw a drop of 6.4% over this period.
- Royal LePage Real Estate Services: Average house prices rose by 3.6% year over year nationally in the third quarter of 2008. However, this increase masked significant regional variations: while some markets such as Halifax and Montreal saw strong gains of 10.4% and 9.1%, respectively, others such as Edmonton and Victoria saw sharp declines of 13.2% and 10.9%, respectively.
As these figures show, housing prices dropped significantly in 2008 as a result of the financial crisis and the recession that followed. The magnitude of the drop varied depending on the source and the method of measurement, but it is clear that 2008 was a year of unprecedented turmoil and hardship for many homeowners and homebuyers around the world.
FAQs
S&P/Case-Shiller Home Price Indices: Home prices fell by 18.2% in November 2008 compared to November 2007 in 20 major metropolitan areas. This was the largest annual decline in the history of the index, which dates back to 1987. For the whole year of 2008, the index showed a decline of 15.3% compared to 2007.
How much did housing prices drop in 2009? ›
Overall, it is estimated that the average house declined by $67,000 in value, while gross value losses at the national level are estimated at $2.44 trillion from peak.
How long did it take for house prices to recover after 2008? ›
Home prices fully recovered by late 2012. If someone bought a house at the very peak of the recession in 2007 and held the property for 5 years, they made money in appreciation after 2012. It took 3.5 years for the recovery to begin after the recession began.
How much did home prices drop in 2007? ›
Home prices barely declined in 2007 in many coastal areas, while prices tumbled in many inland areas. In the San Francisco metro area, prices fell 0.9%; and prices in Santa Cruz, San Jose, and Los Angeles fell less than 4%.
How long did it take to recover from the 2008 recession? ›
Following these policies, the economy gradually recovered. Real GDP bottomed out in the second quarter of 2009 and regained its pre-recession peak in the second quarter of 2011, 3½ years after the initial onset of the official recession. Financial markets recovered as the flood of liquidity washed over Wall Street.
Will housing be cheaper if the market crashes? ›
Will housing be cheaper if the market crashes? It indicates an expandable section or menu, or sometimes previous / next navigation options. A market crash would likely push prices down and make housing cheaper, but it would remain unaffordable for many if the crash was caused by a larger recession.
When was the biggest housing market crash? ›
When Did The US Housing Market Crash. The most recent US Housing Market Crash took place between 2007 and 2009, with the most dramatic impacts of the crash occurring in 2008.
Is it better to have cash or property in a recession? ›
Cash. Cash is an important asset when it comes to a recession. After all, if you do end up in a situation where you need to pull from your assets, it helps to have a dedicated emergency fund to fall back on, especially if you experience a layoff.
Will there be another housing crash like 2008? ›
“We will not have a repeat of the 2008–2012 housing market crash,” Yun said in a statement last fall. “There are no risky subprime mortgages that could implode, nor the combination of a massive oversupply and overproduction of homes.”
How far did real estate fall in 2008? ›
The long, sharp slide in Southern California home values is all but eliminating demand for new houses.
The Crash. The collapse of the housing market during the Great Recession displaced close to 10 million Americans as rising unemployment led to mass foreclosures. 1 In 2008 alone, 3.1 million Americans filed for foreclosure, which at the time was one in every 54 homes, according to CNN Money.
How many people lost their homes in 2007 and 2008? ›
About 8.7 million people lost their jobs, sending the unemployment rate soaring to 10 percent. Housing prices dropped by a third nationwide from their 2006 peak — and even further in California — causing as many as 10 million people to lose their homes.
When was the last housing crash? ›
The American subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the 2007–2008 global financial crisis.
Is a recession coming in 2024? ›
Economists predict another year of slow growth around the world in 2024. While the risk of a global recession is lower in the year ahead, two G7 economies dipped into recession at the end of 2023.
What was the worst recession in history? ›
In the United States, the Great Recession was a severe financial crisis combined with a deep recession. While the recession officially lasted from December 2007 to June 2009, it took many years for the economy to recover to pre-crisis levels of employment and output.
What stopped the 2008 recession? ›
In February 2009, under new President Barack Obama, Congress passed the $789 billion American Recovery and Reinvestment Act, which helped bring about an end to the economic recession. The stimulus package included $212 billion in tax cuts and $311 billion in infrastructure, education and health care initiatives.
Have house prices seen the biggest fall since 2009? ›
London house prices in October dropped 3.6%, the most since 2009 when the financial crisis was raging. The figures add to the impression of a property market under pressure after the Bank of England aggressively raised interest rates in a bid to tame inflation.
Did the housing market crash in 2009? ›
U.S. housing prices fell nearly 30% on average and the U.S. stock market fell approximately 50% by early 2009, with stocks regaining their December 2007 level during September 2012. One estimate of lost output and income from the crisis comes to "at least 40% of 2007 gross domestic product".
Why did people lose their homes in 2009? ›
The subprime mortgage collapse caused many people to lose their homes. Many Americans faced financial disaster as the value of their homes dropped well below the amount they had borrowed, and subprime interest rates spiked. Monthly mortgage payments almost doubled in some parts of the country.
How long did it take the housing market to crash in 2008? ›
Housing prices peaked in early 2006, started to decline in 2006 and 2007, and reached new lows in 2011. On December 30, 2008, the Case–Shiller home price index reported the largest price drop in its history.
