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
Southern California home prices close out 2008 down 35% - Los Angeles Times.
How much did US house prices fall in 2008? ›
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 house prices drop in the recession? ›
After falling 33 percent during the recession, housing prices have returned to peak levels, growing 51 percent since hitting the bottom of the market.
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 the housing market to recover after 2008? ›
It took 3.5 years for the recovery to begin after the recession began. A lot of buyers who bought in 2008, 2009 or 2010 saw their home prices decrease before the recovery started in 2011. Condos deprecated by only 12%, while single-family homes depreciated by 19% after the recession.
Why were houses so cheap in 2008? ›
In 2008, the housing market bubble burst when subprime mortgages, a huge consumer debt load, and crashing home values converged.
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.
Do houses get cheaper in a recession? ›
Typically, in recessions, the demand for houses declines and as a result house prices will fall. This was the case in the last recession back in 2008 when the housing bubble burst and the recession began.
Is it better to have cash or property in a recession? ›
Cash. Cash is an important asset during a recession. Having an emergency fund to tap if you need extra cash is helpful. This way, you can let your investments ride out market lows and capitalize on long-term growth.
Did anyone predict the housing crash in 2008? ›
Years before the housing bubble burst in 2008, housing analyst Bill McBride began chronicling the troubles in the U.S. housing market in his blog Calculated Risk. Not only did he predict the crash, but he also called the 2012 housing price bottom.
In 2007, real estate crashed completely with hundreds of thousands of homes going into foreclosure, multiple subprime lenders declaring bankruptcy and the market requiring government bailouts. The market continued to slow down, with flat prices and home sales being the biggest trend.
How many people lost their homes due to the 2008 recession? ›
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.
Was it hard to buy a house in 2009? ›
2009 has proved to be an exhausting and trying year for home buyers and real estate professional alike. With the extension and expansion of the federal tax credit and an improving economy we see good things happening in 2010.
Was 2008 a good time to buy houses? ›
On the other hand, 2008 was a bad time to buy because home prices were high and then plummeted when the housing bubble burst. But that doesn't mean people in 2019 knew it was a good time to buy a house—or that people in 2008 knew it was a bad time.
What was the worst financial crisis in history? ›
The Great Depression of 1929–39
Encyclopædia Britannica, Inc. This was the worst financial and economic disaster of the 20th century. Many believe that the Great Depression was triggered by the Wall Street crash of 1929 and later exacerbated by the poor policy decisions of the U.S. government.
Who made the most money in the 2008 financial crisis? ›
- Warren Buffett.
- John Paulson.
- Jamie Dimon.
- Ben Bernanke.
- Carl Icahn.
From October 6–10, 2008, the Dow Jones Industrial Average (DJIA) closed lower in all five sessions. Volume levels were record-breaking. The DJIA fell over 1,874 points, or 18%, in its worst weekly decline ever on both a points and percentage basis. The S&P 500 fell more than 20%.
How much money was lost in 2008 housing crisis? ›
It was among the five worst financial crises the world had experienced and led to a loss of more than $2 trillion from the global economy. U.S. home mortgage debt relative to GDP increased from an average of 46% during the 1990s to 73% during 2008, reaching $10.5 (~$14.6 trillion in 2023) trillion.
What was the housing market crash in 2008 for dummies? ›
The 2008 financial crisis began with cheap credit and lax lending standards that fueled a housing price bubble. The low-quality loans were packaged and resold to financial institutions as investments. When the bubble burst, the institutions were left holding trillions of dollars of worthless mortgages.
What caused the housing crash in the 80s? ›
Elevated interest rates, lack of affordability, low inventory and slow sales were all hallmarks of the early 1980s market. Demographic changes were also similar, with a large number of people moving into the prime homebuying age. Falling inflation and stabilizing mortgage rates helped the '80s market get back on track.
