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 fixed4.32%4.27%
15 yr fixed3.29%3.27%
5/1 ARM3.34%3.47%
30 yr refi4.29%4.24%
15 yr refi3.26%3.25%
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 16,982.59 22.02 0.13%
Nasdaq 4,444.91 -4.65 -0.10%
S&P 500 1,978.91 0.57 0.03%
Treasuries 2.49 0.02 0.89%
Data as of 5:16pm ET
Company Price Change % Change
Apple Inc 99.02 1.99 2.05%
Facebook Inc 74.92 -0.06 -0.08%
Bank of America Corp... 15.50 -0.09 -0.58%
Dollar Tree Inc 54.87 -0.08 -0.15%
Family Dollar Stores... 75.74 15.08 24.86%
Data as of 4:03pm ET

Sections

The SEC fines the Massachusetts gun maker for bribing officials when trying to secure sales contracts with overseas military and law enforcement agencies. More

New annual report from U.S. government shows the long-term prognosis for Medicare has improved thanks to slower health spending, while the outlook for Social Security remains unchanged. More

Online dating site OkCupid found its users were more likely to have conversations when it told them they were more compatible than in reality. More

Actor-founded This Bar Saves Lives had Hollywood connections, but learned Start-Up 101 the hard way. More

Ali Ewoldt has performed in Broadway musicals and TV shows. Her days consist of auditions, rehearsals, and being on stage in front of hundreds of people at a time. Here are journal entries from a day in her life. 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.