Do Home Prices Go Down? The Housing Crash and Recovery by State and ZIP Code

Yes, home prices can fall

Home prices usually rise over long periods, but they do not rise every year. The clearest modern example is the housing bust that followed the mid-2000s boom, when the national index fell for several years in a row and many regions took a decade or more to return to their old highs.

The tables on this page measure that episode directly from FHFA HPI® data: each area's highest index value between 2004 and 2009, its lowest point afterward, the size of the drop, and the first quarter its index climbed back to the old peak.

Why some places fell much further than others

The deepest declines were concentrated where prices had risen fastest during the boom, where new construction had added a large supply of homes, and where buyers relied heavily on loose credit. When credit tightened and foreclosures rose, those markets had the most room to fall.

Regions with steadier boom-era growth, less speculative building, or stable local employment often saw only modest declines, and a few saw almost none. That is why national averages understate the risk in some places and overstate it in others.

What recovery time tells you

Recovery time is the gap between an area's peak and the first quarter its index regained that level. For a homeowner who bought near a peak, it is roughly how long the regional average would have kept them under water before inflation, selling costs, or loan paydown are considered.

Nominal recovery is not the same as real recovery. An index that regains its old high after ten years has still lost ground to inflation over that decade. The companion guide on home prices versus inflation shows how each area has done after adjusting for consumer prices.

How to use this history

Past declines do not predict future ones, but they are a useful stress test. If your region fell sharply last time, a household with little equity, a short expected holding period, or a variable-rate loan may want a larger cushion. Each ZIP region, state, and metro page on this site shows its own boom, bust, and recovery figures.