Though the median U.S. home is worth 9.8 percent more today than its pre-recession peak, the path to regaining home value has been uneven for the less-financially sound households even today. Median home values have recovered at a much faster pace in the country’s national market as opposed to nearby areas of the same markets, that faced a higher rate of foreclosures, according to an analysis by Zillow [1]. In the aftermath of the housing crisis, numerous homes in several ZIP codes are still burdened.
Zillow’s analysis titled, Uneven Recovery: Many High-Foreclosure ZIP Codes Haven't Bounced Back’ [2], points to ZIP codes with homes that suffered the highest foreclosure rates during the pre-recession period recovered at a much lower rate than homes in nearby ZIP codes with fewer foreclosures. Across the nation's largest 35 metros, 54.3 percent of homes in areas with the fewest foreclosures have fully recovered, compared to on 39.1 percent of homes in areas with the most foreclosures.
Commenting on the crisis, Aaron Terrazas, Senior Economist at Zillow, said, "The Great Recession is far in the rear-view mirror, but economists are beginning to ask how long the current economic expansion can run on. Communities that experienced the sharpest downturns a decade ago could find themselves confronting the next economic downturn–when it does eventually arrive–having not yet fully recovered from the last one."
Recovery overall has been slow in places like Riverside, California, compared to divergent metros in neighboring metros such as San Francisco, San Jose, Los Angeles, and San Diego, leading to wealth disparities.
The analysis found that nearly half of the homes foreclosed across the country were in the bottom third in terms of value. In sharp contrast, high-foreclosure areas in Chicago and Miami recovered at a slightly higher rate.
Twelve out of 19 cities with a disparity in recovery rates are perceived to have recovered from recession losses. In Atlanta, the median home value has increased by 13.6 percent compared to its largest pre-recession value. However, only 39.4 percent of homes in Atlanta’s high-foreclosure ZIP codes have recovered their pre-recession peak values, compared to 77.6 percent of homes in low foreclosure ZIPs.