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
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.
How much did housing prices drop in the 2008 crash? ›
Southern California home prices close out 2008 down 35% - Los Angeles Times.
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.
What was the biggest real estate crash in history? ›
The most recent US Housing Market Crash took place between 2007 and 2009, with the most dramatic impacts of the crash occurring in 2008. The 2008 housing market crash was one of the primary causes of the global financial crisis, wreaking havoc on the financial stability of entire economies the world over.
Do house prices go down in a recession? ›
What happens to house prices in a recession? While the cost of financing a home increases when interest rates are on the rise, home prices themselves may actually decline. “Usually, during a recession or periods of higher interest rates, demand slows and values of homes come down,” says Miller.
Why the 2008 housing crash won t happen again? ›
No. There are still far more buyers than sellers, and that means a meaningful price decline can't happen: “There's just generally not enough supply,” says Mark Fleming, chief economist at title insurer First American Financial Corporation.
How many people lost their houses in 2008? ›
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.
Why were houses so cheap in 2008? ›
The subprime mortgage crisis led to a drastic impact on the U.S. housing market and overall economy. It lowered construction activity, reduced wealth and consumer spending, and decreased the ability for financial markets to lend or raise money.
Have house prices seen the biggest fall since 2009? ›
House prices are 5.3% lower compared to August last year in the biggest annual decline since 2009, according to Nationwide. The building society said the drop represented a fall of £14,600 on a typical home in the UK since house prices peaked in August 2022.
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.
Are we in a recession 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.
Was 2008 a good time to buy a home? ›
For example, 2019 was a great time to buy because mortgage rates were low, and home prices hadn't yet skyrocketed as they did shortly after. On the other hand, 2008 was a bad time to buy because home prices were high and then plummeted when the housing bubble burst.
Will there be a housing market crash in 2024? ›
Is the housing market going to crash in 2024? Though many Americans believe the housing market is at risk of crashing, the economists who study housing market conditions overwhelmingly do not expect a crash in 2024 or beyond.
Who profited the most from the housing market crash? ›
Michael Burry is an investor who profited from the subprime mortgage crisis by shorting the 2007 mortgage bond market, making $100 million for himself and $700 million for his investors. Burry shut down his hedge fund, Scion Capital, in 2008.
How much did real estate values drop in 2008? ›
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.
How much did the market drop in 2008? ›
9, 2007 -- but by September 2008, the major stock indexes had lost almost 20% of their value. The Dow didn't reach its lowest point, which was 54% below its peak, until March 6, 2009. It then took four years for the Dow to fully recover from the crash.
Did anyone predict the 2008 housing crash? ›
A legendary Wall Street forecaster warns that the whole space is set to implode. "I think the biggest bubble right now is commercial real estate,” Gary Shilling, an economist best known for correctly forecasting the 2008 housing crash, said on investing podcast The Julia La Roche Show last week.
How many people lost homes in 2008? ›
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.
What happens to interest rates when the housing market crashes? ›
In general, interest rates are likely to rise if the housing market crashes. This is because when the housing market goes down, it's often a sign that the overall economy is doing poorly too. And when the economy does poorly, investors typically look for safer investments like government bonds and mortgages.
