After seeing homes prices peak in 2006, the US housing market collapsed in the longest economic recession this country has seen since the 1940s. Nationally home prices dropped 33% on average. In Michigan, home prices crashed 43%, which is 10% more than the national average and the 4th largest loss in value in the country. Only Nevada, Arizona, and Florida dove deeper. This downward trend continued through 2011, where we saw the bottom.

As the third millennium began, the housing industry experienced favorable tailwinds for growth. What was the catalyst for this historic drop? Well, there are a myriad of causes, but some of the major causes are the rise in subprime lending, and the explosion of housing speculation. Bottom line is that prices were increasing at an unsustainable rate.
So, where are we now? Nationally, the market is rather balanced. About 1/3 of homes are overpriced, 1/3 are undervalued, and the last 1/3 are priced at value. The question is not about where we are on a national scale, but rather where are we in various geographic segments of the market? To analyze this, we can look at the growth rate over the last 5 years. Here we have, Nevada first at over 90%, followed by Washington, California, Oregon, Colorado, and then Michigan rounding out the top 6 at 48%. Some of these areas are likely growing too fast, while others are likely growing at a healthy pace. For example, although Nevada has the top 5-year growth rate, it is still below its 2006 peak. The Denver area on the other hand, is up over 53% from its peak.
Interestingly, Michigan is now at the same housing price level as it was in late 2005, which was the peak for the state. However, there are major economic differences in the state between now and 13 years ago. Average wages are higher, unemployment rate is lower, mortgage rates are actually lower, but loan restrictions are much tighter, and the stock market is valued at trillions more. Overall, Michigan is showing healthy, sustainable growth since the economic recession. The biggest housing issue faced in the state today, is the lack of inventory, as we have a historically low number of listings actively for sale on the market.