Vegas home prices: On the skid until 2032

By Les Christie, staff writer


NEW YORK (CNNMoney) -- Move over, Cleveland. Make room, Detroit. Beat it, Buffalo. There are some competitors for the title of America's most depressed real estate market.

These are not old Rust Belt post-industrial cities, where the manufacturing economy vanished years ago; these cities were flourishing as recently as 2005. But they got crushed by the housing bubble, and most won't recover from the damage until at least 2030.

chart_home_prices.gif

"The bubble caused a lot of over-investment in these markets," said Celia Chen, a housing market analyst for Moody's Analytics.. "It's all collapsing because of the recession and over-valuation."

So, bring on the contenders.

Chen estimates that Las Vegas home prices won't return to their pre-recession peak until after 2032; in Phoenix, the rebound will take until 2034; and Salinas, Calif., and Naples, Fla., won't come back until sometime around 2038.

And these are nominal prices: Inflation-adjusted recovery will take even longer.

"The economies were very closely tied to residential construction," said Chen. "Now, housing is over-supplied and that part of the economy will not come back for a long time."

Chen cautions to take those forecasts with a grain of salt, however. It's impossible to be exact about such long-term trends. Housing is also very dependent on the overall economy and other factors. Predictions can easily be off by many years as conditions change.

Still, it illustrates the devastation wrought by the housing bust. Many on the list of cities where the recovery will take the longest had tied their fortunes to home building. The bust has put such a hurt on that industry that the cities are now stagnating.

A case in point is Stockton, Calif., where prices soared 230% from 1980 to 2006 because residents of the Bay Area, unable to afford pricey San Francisco, purchased homes there.

"People moved farther and farther out to less expensive markets," said Chen.

Once the bubble burst, that all ended. Some homeowners got tired of the commute. Investors stopped coming. Foreclosures piled up and added to inventory. Prices fell and fell faster. Now prices are only 9% higher than in 1980 and about the same as they are in Detroit.

For non-bubble markets, the damage was usually much less severe. Cities such as Pittsburgh, Syracuse and Rochester, N.Y., Clarksville, Tenn., and Spokane, Wash. will be back to their peaks within three years or so, Chen said.

Many of the larger, older metro areas that saw moderate or even fairly high home price appreciation during the boom years will recover faster than the bubble markets but slower than the steady-eddie ones.

Washington will return to peak by around 2025, Chen said. Boston and Chicago will recover by about 2019, and New York by 2021.

"Nationally, we expect U.S. [home prices] to recover by 2021," said Chen.

That only sounds like a long way off because it is. To top of page


Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.21%4.16%
15 yr fixed3.27%3.25%
5/1 ARM3.51%3.38%
30 yr refi4.20%4.15%
15 yr refi3.27%3.24%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
  • Find Homes for sale
    Real estate and homes for sale on Trulia

  • Property Type
  • Find a home in: New York | Atlanta | Chicago | Los Angeles
  • Washington D.C | Houston | Philadelphia | More options
Index Last Change % Change
Dow 17,156.85 24.88 0.15%
Nasdaq 4,562.19 9.43 0.21%
S&P 500 2,001.57 2.59 0.13%
Treasuries 2.60 0.01 0.42%
Data as of 11:44pm ET
Company Price Change % Change
Bank of America Corp... 16.77 0.06 0.36%
Apple Inc 101.58 0.72 0.71%
Yahoo! Inc 42.59 -0.12 -0.28%
Microsoft Corp 46.52 -0.24 -0.51%
Alcoa Inc 16.28 0.12 0.74%
Data as of 4:03pm ET

Sections

Alibaba founder Jack Ma could earn as much as $867 million from his company's market debut. More

The Federal Reserve is probably not going to raise interest rates until the summer of 2015 at the earliest. More

Frederick Hutson launched Pigeon.ly in 2012 to help inmates communicate with their friends and family. He's on target for $1 million in sales this year. More

Occupy Wall Street offshoot Strike Debt says it has abolished nearly $4 million in private student loan debt for students who attended Everest College, part of Corinthian Colleges. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.