The change in the value of homes in the US over the last 20 years

In investment terms, house prices have traditionally been considered relatively stable and slowly rising, mostly in line with inflation and exhibiting little volatility. But for at least the past 20 years, home prices have been all but stable. In fact, over the past two decades, home values have gone through two distinct and opposite periods that are not usually associated with the real estate market: a period of negative returns and a period of double-digit returns, both in a relatively short period of time. Here's how U.S. home values have changed over the past 20 years, based on data from Zillow.

General trends in U.S. home prices over the past 20 years

Look at the graph'. 'below to see that the overall trend in U.S. home prices over the past 20 years is upward. While there have been periods of ups and downs in home values, the bottom line is this: over the past 20 years, the median home price in the U.S. has increased from about $140,000 to about $340,000 as of April 2023.

The Great Recession, 2006-2012.

Home prices rose sharply between 2003 and 2006, but the party ended with the Great Recession and the collapse of home prices over the next five to six years. As has been well documented in both the financial press and in movies like The Big Short, home prices were artificially inflated in the years leading up to the Great Recession. Adjustable interest rates were given to unqualified buyers with little or no''docs, and when interest rates rose, many of these property owners became insolvent, causing the housing and banking markets to collapse and nearly causing the overall collapse of the U.S. economy. This combination of economic factors took years to play out, and home prices continued to fall even after the economy as a whole climbed out of recession. In the end, the median home value in the US fell by about 33%, nearly wiping out any gains they made from 2003 to 2006. This effectively made 2003-2012 the "lost decade," in which home prices barely grew at all.

During the recovery, 2012-2023.

After excesses were drained from the U.S.

Aligning the line

As with many investments, such as the stock market, it makes sense to take a closer look and look at long-term price trends. When you eliminate month-to-month and even year-to-year fluctuations, there appears''overall trend. Despite the boom and bust periods that the housing market has experienced over the past 20 years, the long-term upward trend remains stable. Since housing tends to be a long-term investment - except for a small percentage of flippers - it is this trend that matters most.

City-specific notes

The price growth in some metro areas over the past decade has been staggering. For example, in the Miami-Fort Lauderdale area, home prices averaged $148,300 in the second quarter of 2012. By May 2023, homes in Fort Lauderdale were selling for an average of $524,274 and in Miami for $553,743, nearly quadrupling the original values. Atlanta home prices rose from $107,900 to $384,388 for the same''period of time.

Other cities, however, have not been so fortunate. In Detroit, the median home price in the second quarter of 2012 was $74,000, but by May 2023, home prices had actually dropped to $64,414. Prices in Cleveland didn't experience any improvement either, dropping from $108,400 in the second quarter of 2012 to just $102,763 in May 2023.