While the Case-Shiller index shows us that, in general, house prices in the United States have improved since the housing market bubble burst, house price trends vary widely on a state-by-state level. For the purposes of this posting, I have chosen to set the house price index to 100 at the beginning of the Great Recession in the fourth quarter of 2007 and that all graphs show prices from 2000 to the first quarter of 2014 for all housing transactions.
Let's start by looking at the house price index a few of America's hardest hit markets, three of which are sun and sand states and two that are in the rust belt:
From the peak in Q3 2006 to the trough in Q1 2012, California's house price index dropped by 40.1 percent. Since the nadir, California's house price index has gained only 24.2 percent, showing that on a state-wide basis, California's housing market index is at levels last seen in mid-2004.
From the peak in Q4 2006 to the trough in Q2 2012, Florida's house price index fell by 44 percent. Florida's house price index has recovered a relatively small portion of what it lost over the six year period, with a gain of only 9.8 percent from its low point. Florida's housing market index is at levels last seen in early 2004.
From the peak in Q3 2005 to the trough in Q2 2011, Michigan's house price index fell by 28.5 percent. Since its low point, Michigan's house price index has only recovered by 11.8 percent from its low point. Michigan's housing market is now at levels last seen in the second quarter of 2000.
From its peak in Q3 2006 to the trough in Q2 2012, Nevada's house price index fell by a rather dramatic 55.3 percent. Since its low point, Nevada's house price index has gained 30.7 percent, however, because of its very dramatic fall, it still sits 41.6 percent below its peak.
From the peak in Q1 2006 to the trough in Q2 2011, Ohio's house price index fell by only 12 percent. Since its low point, Ohio's house price index has gained very little, rising by less than 1 percent. Ohio's house price index is now at the same level last seen in early 2002.
It is also interesting to look at the house price index graphs for New York:
Note that both of these states saw relatively mild bursting of the real estate bubble but have also seen very little price correction since the lows experienced after the Great Recession. In the case of New York, the house price index is now at the same level that it was in Q1 2005 and in Connecticut, the house price index is now at the same level that it was in Q2 2004.
Now, let's compare the experience of Texas. Many economists note that Texas has a land development system that promotes rather than discourages development. This means that land use regulations which tightly restrict residential developments in states like California are less of a concern for developers in Texas
Here is the house price index for Texas:
It is interesting to observe that the house price index for Texas rose right through the period from 2006 to early 2009 when it corrected very slightly. From the Great Recession peak to the "trough" in Q2 2011, Texas' house price index fell by only 4.1 percent, an insignificant correction. Since the "trough", Texas' house price index has risen by 11.1 percent, bringing the current level to a new high.
When we read in the mainstream media that America's housing market is on the mend, we need to keep in mind the data from this posting. The recovery in the housing market has been very uneven and while prices have shown upward moves, geographically, much of the nation has seen relatively little improvement in residential real estate valuations except in certain key markets. This is particularly apparent when you see that many states have seen no price appreciation for over a decade.