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.
How Much Did Housing Prices Drop in 2008?
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.