There is much talk in the press about today’s real estate values mirroring the “bubble years” of  2005 to 2007. The data does not support this implication of another pending apocalyptic collapse.

Real estate values peaked back then in 2007 and came crashing down. Hitting their nadir in 2013. Since then, they have been increasing at a fairly consistent rate.  

The graph above shows an index analysis of nationwide real estate values (source: FHFA Housing Price Index). I compared an index of real estate values, by quarter, over a six year period beginning in 2013, and then again starting in 2019. The compound annual growth rate (“CAGR”) over both periods was 6.1%. While the 2019-2024 period lagged the 2013-2018 period early on, it caught up through 2023 and 2024. It now appears to be coming back into alignment with the longer-term trend.

This does not mean, however, that there are no geographic pockets of risk; especially in newly originated, high LTV portfolios. 28 MSAs (out of 404) in December of 2024 showed decreases in real estate value from one year ago. Additionally, we are seeing increasing sales time of real estate listings, as well as more price reductions in those listings. It could be argued, however, that this is more of a reversion to the long-term mean than a sign of increasing stress. Constrained housing supply should keep real estate values at reasonable levels over most markets.

The risk to your portfolio of decreasing real estate values will be driven, not by supply and demand, but by:

• Uninsured natural disasters
• Spikes in unemployment
• A surfeit of second liens

Since real estate values are critical to the financial health of loan originators, investors and servicers, it is imperative that we watch these drivers at a local level. Cornelius Vanderbilt said “I put all my eggs into one basket, but I watched them like a hawk”. We should be doing the same.

Feel free to contact us if you would like access to our quarterly national Housing Price Index Analysis or receive an updated LTV Risk Analysis of your portfolio. Why guess, when you can be right?