Examining home price changes in four Western U.S. metro areas before, during and after the pandemic
The hottest U.S. housing markets have been experiencing dynamic shifts over the past few years, showcasing a pattern of constant change and evolution. CoreLogic’s May Home Price Insights report put Camden, New Jersey as one of the top metro areas for appreciation in March 2024 and South Dakota as the second-fastest appreciating state.
This was not the case one year ago. In March 2023, Miami and Florida led the way. Conversely, the bottom metro was Austin, Texas, while Idaho was the slowest-appreciating state at that time. Three years ago, the latter two locations were lauded as the new real estate hot spots, leading the country for gains during the pandemic; now they are fairly cold. However, despite the sharp turnaround, pandemic boomtown housing markets still appear resilient for the future.
Austin, Boise, Phoenix and Salt Lake City Show Major Price Gains During the Pandemic
Figure 1 shows the CoreLogic Home Price Index for four markets that were very strong in 2020, 2021 and 2022: Austin, Boise, Phoenix and Salt Lake City [1]. Boise had by far the greatest appreciation over that period, reaching 230% of its initial value in May 2022 before starting to depreciate. Still though, as of February 2024, prices in Idaho’s capital are more than twice what they were five years ago.
The other three metros all show similar trends to Boise, peaking in mid-2022, then declining. However, there is some variation in 2023 activity. Phoenix actually posted aggressive price increases of more than 5% for the first 11 months of the year, Salt Lake City was more or less flat and Austin showed the largest price drop of any large metro in the country for the year at 6%.
Figure 2 shows the rankings of the same four metros for annual appreciation by month from January 2018 to February 2024 [2]. Though places like Boise and Salt Lake City were often seen as something of surprise destinations during the pandemic, data shows that both of these metros (along with Phoenix) were amongst the fastest-appreciating places in the county in the years leading up the 2020-2022 price boom.
Austin is the only metro in this analysis that could be seen as an outlier. The Texas capital rapidly rose from being in the bottom one-third of the top 100 in terms of appreciation in 2018 to the top 10 from 2020-2022. All of four metros have since rapidly dropped to the bottom 10 and remain there, though Phoenix is beginning to see a comeback.
However, rapid slowdowns in the market should be viewed in a broader context. Figure 3 examines overall price rankings rather than appreciation rankings. Overall price rankings roughly measure the relative demand for a given market, since prices show the willingness of a person or household to pay to live in an area. Essentially, if one place becomes more expensive than another, it is reasonable in most cases to believe that some underlying condition has changed that makes it a more attractive community, or conversely, another place less desirable.
Despite the wild ride in terms of price appreciation, Figure 3 shows that Austin and Salt Lake City have held steady as being among the 30th to 40th most expensive U.S. places to live. Phoenix and Boise, however, experienced increases in their rankings that pushed them from being among the country’s 40th to 50th most expensive places to the same tier as Austin and Salt Lake City. This raises an alternative perspective that metros that experienced a boom and/or crash appreciated until they reached a point that fits their current attractiveness to buyers.
Homeowners in the Four Metros Still Have Plentiful Equity
Figure 4 shows the average equity of borrowers for all four metros and illustrates how recent slowdowns have resulted in only small changes in equity, with most of the gains earned during the pandemic preserved. Homeowners in all four places gained more than $150,000 in equity from 2019 to 2022 and all still have more than $100,000 in equity according to CoreLogic’s Q4 2023 Homeowner Equity Insights data.
Ultimately, despite experiencing sudden and sharp slowdowns in appreciation over the past year-and-a-half, it would be a wild exaggeration to say that pandemic boomtowns have seen anything resembling a price crash. Also, these were hot markets before the pandemic due to robust population growth, suggesting that they have strong fundamentals for continued price appreciation in the long run.
CoreLogic’s Home Price Insights (generally released on the first Tuesday of each month) and U.S. CoreLogic S&P Case-Shiller Index (generally released on the last Tuesday of each month) reports offer the latest data on national, state and metro home prices, along with commentary from our team of housing economists. And for all insights from CoreLogic’s Office of the Chief Economist, this home page has the latest.
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[1] Indexes are normalized so that they have the same value in January 2017.
[2] 100 on the Y-axis means that metro had the highest appreciation, and 1 means it had the lowest.
