FYI: An Update on Emerging Issues in Banking

FYI Revisited

U.S. Home Prices: Does Bust Always Follow Boom?

May 2, 2005

Summary

In February 2005, the FDIC released an FYI report entitled "U.S. Home Prices: Does 

Bust Always Follow Boom?" The article examined the historical pattern of home price 

booms and busts for U.S. metropolitan areas. This issue of FYI updates the home 

price analysis from the previous article, using recently released 2004 data for the 

house price index (HPI) published by the Office of Federal Housing Enterprise 

Oversight (OFHEO). Based on this index, U.S. average home prices rose by almost 11 

percent in 2004, up from 7 percent in 2002 and 2003. Moreover, the number of boom 

markets according to our definitions increased by 72 percent last year, and now 

includes some 55 metropolitan areas.

The broadening of the U.S. housing boom during 2004 may imply a growing role for 

national factors–including the availability, price, and terms of mortgage credit–in 

explaining home price trends. To the extent that credit conditions are in fact driving 

home price trends, the implication would be that a reversal in mortgage market

conditions could contribute to an end of the housing boom. While history clearly shows 

that housing booms don’t last forever, the manner in which they end matters for 

mortgage lenders and borrowers alike.

Background

Our February 2005 FYI report examined the historical pattern of home price booms 

and busts for U.S. metropolitan areas from 1978 through 2003. It defined a “boom” 

market as one in which inflation-adjusted prices rose by at least 30 percent in a threeyear period. Based on this definition, some 63 cities had experienced a boom at some 

point in the last 30 years, and 33 cities were experiencing a boom as of the end of 

2003. The report also defined metro-area housing “busts” as markets in which home 

prices had declined by at least 15 percent (in nominal terms) over a five-year span. 

While 21 housing busts have occurred since 1978 under this definition, only nine of 

them have occurred on the heels of a housing boom.

One conclusion of this study was that a housing boom does not necessarily lead to a 

housing bust. In fact, boom was found to lead to bust in only 17 percent of all cases 

prior to 1998. Moreover, when busts occurred they were typically preceded by 

significant distress in the local economy. The most common way for a housing boom 

to resolve itself was through a period of price stagnation that allowed local economic 

fundamentals to catch up with high home prices. In the end, however, the paper 

suggested the applicability of this historical experience to the current housing boom

remains uncertain. The expansion of subprime and high loan-to-value mortgages, 

along with growing use of home equity lines of credit, could change the dynamics of 

home prices in future cycles.

This issue of FYI updates the home price analysis from the previous article, using 

recently released 2004 data for the HPI published by OFHEO.

Home Price Developments in 2004
Based on the OFHEO house price index, U.S. average home prices rose by almost 11 

percent in 2004. This was the most pronounced gain in nominal home prices since 

1979 and was a substantially higher rate of appreciation than the 7 percent gains in 

both 2002 and 2003. Adjusted for inflation, the price of the average home in the 

OFHEO sample increased by 8 percent–the fastest pace recorded in 30 years.

The acceleration in home prices last year appears to have been greater than the 

improvement in underlying economic fundamentals would have suggested.

Fundamental economic factors, such as rental rates and personal income, typically

help to determine home price trends. Last year, home prices rose 11 percent, but rents

only increased by 2.7 percent nationwide. In 2003, the 7 percent gain in home prices

also outstripped a 2.4 percent gain in rents.1

As for personal income, it grew 5.8 percent in 2004 and 4.2 percent in 2003. While 

stronger than the pace of rent growth, this was still far less than the pace of home 

price gains during the past two years. This gap between growth in home prices and 

incomes has been widening since the decade began. Moreover, the price-income gap 

has become especially pronounced in high-cost metro areas.

The housing affordability index for first-time homebuyers of the National Association of

Realtors, which takes into account home prices, incomes and interest rates, slipped 

3.8 points in 2004 to 77.7.2This marks the second-lowest annual level for the 

affordability index since the recession year of 1991. The lowest reading during this

interval was 75.9 in 2000, when 30-year mortgage rates were over 8 percent. If this

decline in affordability continues, it might eventually weigh on home sales and price 

appreciation as first-time buyers are priced out of the market.

The Number of Boom Markets Increased Markedly in 2004

The strong nationwide home price performance last year was driven by accelerating 

appreciation in a number of metropolitan areas. The number of individual markets that

met the boom criteria increased by 72 percent in 2004, to 55 metro areas. Table 1 

summarizes the boom/bust findings using the 2004 data, updating Table 1 of our

earlier FYI report which used 2003 data. 

Table 1: Historical Evidence of U.S. Home Price Booms and Busts, 1978-2004 - PDF

Table 1: Historical Evidence of U.S. Home PriceBooms and Busts, 1978-2003 - PDF

Some 15 percent of the 362 metropolitan areas for which OFHEO publishes the HPI 

met the boom criteria at year-end 2004. This represents the highest proportion of 

"boom" markets nationwide in the 30 years of historical price data published by 

OFHEO.3 The 55 boom markets last year compare to 22 just two years earlier and to 

only 9 boom markets identified as recently as 2000 (see Chart 1).
D

Prior to the recent surge in home prices, the last time the United States saw a large 

number of metro areas experiencing housing booms was in 1988. At that time, 24 

markets were experiencing a boom. That number was 11 percent of the 215 cities for 

which home price information is available between 1985 and 1988. Only one city fell 

off the boom list between 2003 and 2004.4 The new additions are summarized by state 

in Table 2.

Table 2 

Most new boom markets in 2004 were located 

in the West and East.

2004 net change in boom markets 

West +8 East +15

California +3 Florida +6

Nevada +3 Northeast* +9

Oregon +1

Hawaii +1

*10 new markets were added to the boom list, but Manchester, NH 

fell off for a net change of +9.

For comparison of individual markets, refer to Table 1 in FDIC's FYI

"U.S. Home Prices: Does Bust Always Follow Boom?" February 10, 

2005 and Table 1 in this FYI.

Source: FDIC FYI Revisited "U.S. Home Prices: Does Bust Always 

Follow Boom?" May 2, 2005.
Overall, the 55 boom markets in 2004 comprised 21 cities in California (38 percent of 

all boom markets), 18 in the Northeast and New England (33 percent), and 11 in 

Florida (20 percent). Thus, 91 percent of the 2004 boom cities were located on, or 

near, the coasts. Such a concentration is by no means unusual. At the peak of the last 

widespread U.S. housing boom in 1988, all of the boom cities were either in California 

or the Northeast. This fact highlights the historical dichotomy between U.S. inland 

housing markets and those located in coastal areas, where land constraints and more 

dynamic economies have led to greater swings in coastal home prices over the past 

30 years.5

Of the 31 cities identified as boom markets in both 2003 and 2004, all but three 

continued to see rising cumulative home price increases in 2004. The exceptions were 

Boston, Stockton, CA and Worcester, MA. During 2003, boom markets boasted an 

average three-year real price gain of 37 percent, just over twice the equivalent national 

average of 17 percent. Last year, the comparable figures were 42 percent for the 55 

boom markets, versus 20 percent nationwide. These data show that inflation-adjusted 

cumulative home price gains continued to accelerate during 2004, both in the boom 

markets and for the nation as a whole.

Factors Behind the Expanding Number of Boom Markets

Through 2003, even as the housing boom extended to 32 metro areas, the most 

plausible explanation for the observed price trends was the combination of historical 

price volatility and strong local market fundamentals in boom cities. Almost half, or 47 

percent, of the 2003 boom markets had seen other booms prior to 2000. However, of 

the 24 boom markets added to the list in 2004, only 6 have ever previously 

experienced a boom in their history. Eighteen markets are booming for the first time 

according to the OFHEO data and based on our criteria.

This broadening of the current U.S. housing boom may imply a growing role for 

national factors, as opposed to local factors alone, in explaining the recent 

acceleration in home price growth. As explained in the February 2005 issue of FYI, 

historical booms and busts in local markets typically relate mainly to local market 

factors. However, the notable expansion in the number of boom markets in 2004 

suggests that national factors could be helping to drive home prices higher. If national 

factors are coming more into play, then clearly the most important factors to look to 

would be the availability, price, and terms of mortgage credit.

The cost of mortgage credit has remained at generational lows during the past two 

years. The annual average contract rate for 30-year mortgages published by Freddie 

Mac fell below 6 percent in both 2003 and 2004–the first time this index has ever been 

below 6 percent in its 33-year history. Meanwhile, rates charged on adjustable-rate 

credit have been based on short-term Treasury rates that fell to their lowest levels 

since at least the late 1950s. The low cost of mortgage credit at this stage of the 

housing cycle could be one factor pushing prices higher by enabling buyers to qualify 

for larger mortgages given the same monthly payment.

In addition, as our previous FYI report discussed, there have been a number of 

changes in mortgage markets that could have an influence on home prices, including 

the emergence of high loan-to-value lending and subprime lending.6 Subprime 

mortgage originations showed a marked increase during 2004, surging to nearly 20 

percent of all mortgage originations from just under 9 percent in 2003.7 This reversed a 

three-year decline in the relative size of the subprime market. The majority of subprime 

loans have been characterized by short-term adjustable-rate structures, many with 

prepayment penalties.
In addition to increased leverage and subprime lending activity, use of adjustable-rate 

mortgages, or ARMs, remains high. According to the Mortgage Bankers Association, 

ARMs accounted for almost 46 percent of the value of new mortgages in 2004 and 32 

percent of all applications. Both figures were up sharply from their 2003 levels of 29 

percent and 19 percent, respectively. It is noteworthy that this development occurred 

despite the fact that the average annual fixed rate for a 30-year mortgage remained 

virtually unchanged from 2003. Furthermore, data from the Federal Housing Finance 

Board indicate that the ARM share is high and rising in several of our boom markets.8

Taken together, these trends suggest that highly-leveraged borrowers are increasingly 

taking on interest-rate risk as they stretch to afford high-cost housing. Although home 

owners taking out ARMs may be more exposed to "payment shock" when their 

monthly payments adjust upward with rising interest rates, for many, this event is 

some years off. A large share of ARMs originated in recent years featured initial fixedrate periods that could last up to ten years. The FDIC and other analysts have 

previously explored the growing role of ARMs in financing home purchases.9

Another evolving trend that has not been tested in a housing market downturn is the 

increasing market penetration of innovative mortgage products, such as interest-only 

(I/O) and option ARMs. These mortgages are specifically designed to minimize initial 

mortgage payments by eliminating principal repayment; but these also can increase 

leverage and expose owners to large jumps in monthly payments as interest rates rise. 

According to Inside MBS and ABS, interest-only mortgages accounted for 23 percent 

of the value of non-agency mortgage securitizations in 2004. Some market participants 

estimate that these higher risk ARMs are increasingly being offered to borrowers 

seeking low- or no-documentation loans and to those with blemished credit histories. 

While financially savvy borrowers using these products are more likely to be prepared 

for the possibility that their monthly payments may jump sharply, marginal borrowers 

may face greater difficulties adjusting as their monthly payments inevitably rise.

Finally, although this factor is not directly related to credit conditions, heightened 

investor purchases of homes could also be signaling a higher degree of speculative 

activity in housing markets during 2004. Data from Loan Performance indicate that 9 

percent of U.S. mortgages in 2004 were taken out by investors, up from just under 6 

percent in 2000. Furthermore, this share is significantly higher in local markets that are 

experiencing the strongest home price appreciation. In some of these markets, it is 

estimated that the investor share of new mortgage originations is as high as 19 

percent. Academic studies show that residential property investors are less lossaverse than owner-occupants and thus more likely to sell precipitously in a declining 

market, thereby aggravating any existing downtrend in home prices.10

Conclusions

Our analysis of the OFHEO historical home price data shows that metro-area housing 

booms don’t last forever. But what matters to lenders and borrowers alike is the 

manner in which housing booms end. In over 80 percent of the metro-area price 

booms we examined between 1978 and 1998, the boom ended in a period of 

stagnation that allowed household incomes to catch up with local home prices. While 

neither lenders nor current homeowners particularly like stagnation in home prices, 

such an outcome represents a necessary adjustment in market conditions that helps 

bring home prices within the reach of new homebuyers.

Mortgage lenders and borrowers encountered a great deal more distress in the 21 

episodes of U.S. metro-area housing busts identified between 1978 and 1998. 

Fortunately, based on the criteria we use to define a housing bust, such an outcome 

can be characterized as relatively rare. In fact, only 17 percent of the housing booms 

identified during this period led to a subsequent bust, and where busts occurred they 
were typically preceded by significant distress in the local economy. To the extent that 

local factors continue to determine home price trends, the expectation would be that 

metro-area home price busts will continue to be relatively rare.

However, the broadening of the U.S. housing boom during 2004 may imply a growing 

role for national factors–including mortgage credit conditions–in explaining recent 

home price trends. More research is needed to establish exactly what role, if any, 

changes in the cost and availability of mortgage credit played in the expansion of the 

U.S. housing boom in 2004. But to the extent that credit conditions are driving home 

price trends, the implication would be that a reversal in mortgage market conditions–

where interest rates rise and lenders tighten their standards–could contribute to an 

end of the housing boom. While our analysis shows that boom does not necessarily 

lead to bust, it remains to be seen to what degree the current situation might differ 

from our previous experience in U.S. housing markets.

Revisions to 2003 Boom Cities

As a result of data from the 2000 Census, the federal government's Office of 

Management and Budget changed the geographic definitions of the nation's largest 

cities, or "metropolitan statistical areas," in recent years. These changes were 

widespread and affected most regional economic data series through the regrouping 

of counties into a greater number of metropolitan areas. OFHEO incorporated these 

changes over the course of 2004, with the final revisions appearing with its fourth 

quarter 2004 HPI release in March 2005. 

The principal change between the original 2003 data we used in our first FYI and the 

current data set is the inclusion of price indexes for newly defined Metropolitan 

Divisions.1 These are subdivisions of larger metropolitan areas for which OFHEO 

previously reported only one price index. For the most part, this change did not affect 

our earlier results. There were three major changes, however, as indicated below:

1. The Dallas-Fort Worth-Arlington, TX MSA was identified in our first FYI as a

boom market in 2003. However, the new geographic definitions recast this

MSA into two areas: the Fort Worth-Arlington Metro Division and the DallasPlano-Irving Metro Division. Home price data for these now-separate

geographic areas no longer meet our criteria of a boom market, or at least a

30 percent gain in home prices, after inflation, between 2000 and 2003.

2. The New York-Northern NJ-Long Island, NY-NJ MSA also appeared on our

first list as a boom market in 2003. However, OFHEO now reports three price

indexes for this area: the New York-Wayne-White Plains Metro Division, the

Newark-Union Metro Division, and the Nassau-Suffolk Metro Division. None

of these met our boom criteria in 2003, although the New York Metro Division

was close, with a 29 percent real price gain between 2000 and 2003.

3. The Boston-Cambridge-Quincy MA-NH MSA was not classified as a 2003

boom market in our February 2005 FYI. The revised HPI data are now

reported for the Boston-Quincy Metro Division. This area, although smaller,

has recently demonstrated more rapid real price appreciation than the

original area that included Cambridge. As a result, Boston now meets our

hurdle, with a 34 percent real price gain between 2000 and 2003.

Because of these definitional changes, our list of boom markets in 2003 has declined 

by one, to 32 cities (see Table 1 "Historical Evidence of U.S. Home Price Booms and 

Busts, 1978-2004"). Our prior list of 2003 boom markets remains mostly the same, 

with the addition of a more-narrowly defined Boston and the removal of Fort Worth 

and New York.
1 The Office of Management and Budget (OMB) defines metropolitan statistical areas 

for purposes of collecting, tabulating, and publishing Federal data. A metropolitan 

statistical area (MSA) is defined as a county or group of counties that has at least one 

urbanized area of 50,000 or more population, plus adjacent territory that has a high 

degree of social and economic integration with the core as measured by commuting 

ties. This definition is not significantly different from the 1990 definition. Further, if 

these criteria are met, an MSA containing a single core with a population of 2.5 

million or more may be subdivided to form smaller groupings of counties referred to 

as metropolitan divisions. In the OFHEO HPI, for large MSAs that are comprised of 

smaller metropolitan divisions, data for each division are now provided. As a result, 

11 MSAs have been replaced by 29 metro divisions. 

Endnotes

1 Based on the “rent of shelter” component of the Consumer Price Index. 

2 The affordability index equals 100 when median family income qualifies for an 80 

percent mortgage on a median-priced existing single-family home. A falling index 

value indicates fewer buyers can afford to enter the market. 

3 See “Revisions to 2003 Boom Cities” in this FYI. 

4 The three-year real price gain for Manchester, New Hampshire now falls just short of 

our 30 percent cutoff. 

5 This contrast is noted often in academic literature, including Jesse M. Abraham and 

Patric H. Hendershott, "Bubbles in Metropolitan Housing Markets" (working paper 

4774, National Bureau of Economic Research, June 1994, 

http://www.nber.org/papers/W4774); and Stephen Malpezzi, Gregory Chun, and 

Richard Green, “New Place-to-Place Housing Price Indexes for U.S. Metropolitan 

Areas, and Their Determinants,” Real Estate Economics 26, no. 2, 1998. 

6 "Subprime" refers to mortgages made to borrowers with limited or impaired credit 

histories. 

7 “Mortgage Originations by Product,” chart, Inside Mortgage Finance, February 25, 

2005. 

8 Federal Housing Finance Board, Monthly Interest Rate Survey, 

http://www.fhfb.gov/Default.aspx?Page=8&Top=4. For example, Las Vegas saw an 

increase in ARM share from 26 percent to 57 percent between fourth quarter 2003 and 

the same period in 2004, while ARM shares also were up significantly during the past 

year in Virginia Beach, Washington, D.C., and Miami. 

9 Cynthia Angell, “Housing Bubble Concerns and the Outlook for Mortgage Credit 

Quality,” FDIC Outlook, Spring 2004, Cynthia Angell, “Home Equity Lending: Growth 

and Innovation Alter the Risk Profile,” FDIC Outlook, Winter 2004; Sally Runyan, 

“Credit Implications of Innovative Mortgage Products Examined,” Asset Securitization 

Report, January 31, 2005; and Daniel McGinn, “Magical New Mortgages,” Newsweek, 

June 14, 2004. 
10 See Dennis R. Capozza and Paul J. Seguin, "Expectations, Efficiency, and Euphoria 

in the Housing Market" (working paper 5179, National Bureau of Economic Research, 

July 1995, and David Genesove and Christopher Mayer, “Loss Aversion and Seller 

Behavior: Evidence from the Housing Market” (working paper 8143, National Bureau 

of Economic Research, March 2001, http://www.nber.org/papers/W8143). 

About FYI 

FYI is an electronic bulletin summarizing current information about the trends that are 

driving change in the banking industry, plus links to the wide array of other FDIC 

publications and data tools. 

Disclaimer 

The views expressed in FYI are those of the authors and do not necessarily reflect 

official positions of the Federal Deposit Insurance Corporation. Some of the 

information used in the preparation of this publication was obtained from publicly 

available sources that are considered reliable. However, the use of this information 

does not constitute an endorsement of its accuracy by the Federal Deposit Insurance 

Corporation. 

Last Updated 05/02/2005
Chart 1. The number of home price booms has more than doubled in the past 

two years to a record 55 markets.

This chart displays the number of all home price booms and busts by year 

from 1978 to 2004.

Booms Busts Count of < 0% markets

1978 4 0 0

1979 9 0 0

1980 1 0 0

1981 0 0 0

1982 0 0 0

1983 0 0 0

1984 0 -1 -1

1985 5 -1 -2

1986 13 -3 -4

1987 16 -4 -7

1988 24 -6 -9

1989 14 -8 -9

1990 15 -7 -9

1991 5 -3 -8

1992 1 -1 -6

1993 0 -2 -5

1994 3 -6 -9

1995 4 -4 -9

1996 3 -2 -9

1997 0 -2 -7

1998 0 0 -4

1999 1 -1 -1

2000 9 0 -1

2001 14 0 -1

2002 22 0 0

2003 32 0 0

2004 55 0 0

Booms: Real price gains of 30% of more in 3 years

Busts: Nominal price decline of at least 15% in 5 years

Source: FDIC (Office of Federal Housing Enterprise Oversight House Price Index, nominal and real, using 

Bureau of Labor Statistics Consumer Price Index less shelter inflation index).
Table 1. Historical Evidence of U.S. Home Price Booms and Busts, 1978 - 2004

This table displays years of home price booms and busts in metropolitan areas during the period 1978 to 2004.

Cities are grouped by geographic region. 

Region and City

Boom Bust Years

Data Not

Available

Years Where Real Home Prices Increased At 

Least 30 Percent From 3 Years Earlier

Maximum 

Real 

Price

Increase

Years Where Nominal Home Prices 

Declined From 5 Years Earlier*

Maximum 

Nominal 

Price

Decline

California 

Bakersfield, CA 2004 +47%

Chico, CA 2003, 2004 +49% 1978

Fresno, CA 2003, 2004 +58%

Hanford-Corcoran, CA 2004 +38% 1978-

1987

Los Angeles-Long BeachGlendale Metro Div,CA

1978, 1979 +46% 1994, 1995, 1996, 1997, 1998 -20%

1988, 1989, 1990 +49%

2003, 2004 +53%

Madera, CA 2003, 2004 +57% 1978-

1983

Merced, CA 2002, 2003, 2004 +43% 1978 

Modesto, CA

1990 +32% 

2002, 2003, 2004 +44% 

Napa, CA

1990 +34% 1978

2000, 2001, 2002, 2003, 2004 +46%

Oxnard-Thousand OaksVentura, CA 

1979 +39% 1994, 1995, 1996, 1997 -17%

1988, 1989, 1990 +50%

2003, 2004 +53%

Redding, CA 2003, 2004 +52% 1978-

1980

Riverside-San BernadinoOntario, CA

1979 +40% 1994, 1995, 1996, 1997, 1998 -18%

2003, 2004 +58%

Sacramento-Arden-ArcadeRoseville, CA

1979 +30% 

1990 +32% 

2002, 2003, 2004 +47% 

Salinas, CA 2000, 2001, 2002, 2003, 2004 +49% 

San Diego-Carlsbad-San 1979 +45%
Marcos, CA 1989 +32% 

2000, 2001, 2002, 2003, 2004 +55%

San Francisco-S Mateo-Redwd 

City Metro Div, CA

1978, 1979 +39%

1988, 1989, 1990 +54%

2000, 2001, 2002 +46%

San Jose-Sunnyvale-Santa 

Clara, CA

1978, 1979 +40% 

1989, 1990 +49%

1999, 2000, 2001, 2002 +51%

San Luis Obispo-Paso Robles, 

CA

1989, 1990 +44% 1994, 1995, 1996, 1997-16%

2001, 2002, 2003, 2004 +46% 

Santa Barbara-Santa Maria-

Goleta, CA 

1989 +34%

2001, 2002, 2003, 2004 +53%

Santa Cruz-Watsonville, CA 1988, 1989, 1990 +45%

2000, 2001, 2002 +48%

Santa Rosa-Petaluma, CA 1989, 1990 +41%

2000, 2001, 2002 +48%

Stockton, CA 2001, 2002, 2003, 2004 +38%

Vallejo-Fairfield, CA 2001, 2002, 2003, 2004 +45%

Visalia-Porterville, CA 2004 +36%

Yuba City, CA 2003, 2004 +56% 1978

-

1986

Other Western Locations 

Bellingham, WA 1990, 1991, 1992 +43% 1978

Bend, OR 1990, 1991 +32% 1978

-

1985

Boulder, CO 

1994 +31%

2001 +31%

Carson City, NV 2004 +44% 1978

-

1987

Corvallis, OR 1994, 1995 +36% 1978

-

1985 

Denver-Aurora, CO 1979 +35% 

Las Vegas-Paradise, NV 2004 +43%

Medford, OR 2004 +31% 1978

-

1980

Mount Vernon-Anacortes, WA 1990, 1991 +37% 1978-
1985 

Ogden-Clearfield, UT 1995, 1996 +30%

Provo-Orem, UT 1995, 1996 +34% 1978-

1982 

Reno-Sparks, NV 2004 +41%

Salt Lake City, UT 1994, 1995, 1996 +36%

Seattle-Tacoma-Bellevue, WA 1978, 1979 +51%

1990, 1991 +38%

Oil Patch 

Anchorage, AK 1987, 1988, 1989, 1990, 1991 -29% 1978-

1981 

Austin-Round Rock, TX 1989, 1990, 1991, 1992 -25%

Casper, WY 1988, 1989, 1990 -34% 1978-

1982 

Grand Junction, CO 1985, 1986, 1987, 1988 -29% 1978-

1979 

Houston-Baytown-Sugar Land, 

TX 1986, 1987, 1988, 1989, 1990 -22%

Lafayette, LA 1986, 1987, 1988, 1989, 1990, 1991 -39% 1978-

1980 

Midland, TX 1987, 1988, 1989, 1990, 1991, 1992 -31% 1978-

1981 

Odessa, TX 1989, 1990, 1991 -24% 1978-

1983 

Oklahoma City, OK 1987, 1988, 1989, 1990, 1991 -26%

San Antonio, TX 1988, 1989, 1990, 1991, 1992 -17% 1978 

New England 

Barnstable Town, MA 1987, 1988 +62% 1992, 1993, 1994, 1995 -15% 1978-

1983 

2000, 2001, 2002, 2003, 2004 +48%

Boston-Quincy Metro Div, MA 1985, 1986, 1987, 1988 +74%

2000, 2001, 2002, 2003, 2004 +38%

Bridgeport-Stamford-Norwalk, 

CT 1985, 1986, 1987, 1988 +71%

Burlington-South Burlington, VT 1988 +32% 1978-

1984 

Hartford-West Hartford-East 

Hartford, CT 1986, 1987, 1988, 1989 +61% 1993, 1994, 1995, 1996, 1997, 1998 -17%
Manchester-Nashua, NH 1986, 1987, 1988 +55% 1991, 1992, 1993, 1994, 1995, 1996 -20% 1978-

1982 

2002, 2003 +35% 

New Haven-Milford, CT 1986, 1987, 1988 +76% 1992, 1993, 1994, 1995, 1996, 1997 -16% 

Norwich-New London, CT 

1988 +50% 1993, 1994, 1995, 1996 -16% 1978-

1984 

2004 +31% 

Portland-South PortlandBiddeford, ME 

1986, 1987, 1988 +47% 1978-

1982 

2004 +30% 

Providence-New Bedford-Fall 

River-Warwick, RI 

1985, 1986, 1987, 1988, 1989 +69% 

2002, 2003, 2004 +46% 

Springfield, MA 1986, 1987, 1988 +63% 1978-

1979 

Worcester, MA-CT 1985, 1986, 1987, 1988 +71% 1978-

1979 

2002, 2003, 2004 +34% 

Other Northeast 

Albany-Schenectady-Troy, NY 1986, 1987, 1988 +49% 1978-

1979 

Allentown-Bethlehem-Easton, 

PA-NJ 1987, 1988, 1989 +48% 

Atlantic City, NJ 2004 +40% 1978-

1983

Baltimore-Towson, MD 2004 +36% 

Hagerstown-Martinsburg, MDWV 2004 +30% 1978-

1987

Kingston, NY 2003, 2004 +41% 1978-

1985 

New York-Wayne-White Plains 

Metro Div, NY

1985, 1986, 1987, 1988 +67% 

2002 +30% 

2004 +33% 

Ocean City, NJ 2002, 2003, 2004 +44% 1978-

1985 

Philadelphia Metro Div, PA 1987, 1988, 1989 +42%

2004 +30% 

Poughkeepsie-NewburghMiddletown, NY 1986, 1987, 1988 +63% 1978-

1980 
2003, 2004 +41%

Scranton-Wilkes-Barre-Hazelton, 

PA 1988 +31% 1978

-

1983 

Trenton-Ewing, NJ 1986, 1987, 1988 +61%

2004 +32%

Virginia Beach-Norfolk-Newport 

News, VA-NC 2004 +31%

Washington-Arlington-Alexandria 

Metro Div, DC

1988 +31%

2003, 2004 +40%

Winchester, VA-WV 2004 +35% 1978

-

1988

Florida 

Cape Coral-Fort Myers, FL 2003, 2004 +38% 1978

-

1982

Deltona-Daytona Beach-Ormond 

Beach, FL 2004 +35%

Fort Walton Beach-Crestview-

Destin, FL 2004 +32% 1978

-

1986

Miami-Fort Lauderdale-Miami 

Beach, FL 2003, 2004 +45%

Naples-Marco Island, FL 2002, 2003, 2004 +35% 1978

-

1983

Palm Bay-Melbourne-Titusville, 

FL 2004 +43% 1978

-

1979

Panama City-Lynn Haven, FL 2004 +30% 1978

-

1985

Port St. Lucie-Fort Pierce, FL 2003, 2004 +54% 1978

-

1979

Punta Gorda, FL 2003, 2004 +42% 1978

-

1986

Sarasota-Bradenton-Venice, FL 2004 +37%

Vero Beach, FL 2004 +38% 1978

-

1984

Other 

Honolulu, HI 

1980 +30% 1996, 1997, 1998, 1999, 2000, 2001 -16%

1989, 1990, 1991 +60%

2004 +35%

Peoria, IL 1984, 1985, 1986, 1987, 1988 -16%
* A city must include at least one 5-year period where nominal prices declined by more than 15 percent.

Source: FDIC (Office of Federal Housing Enterprise Oversight House Price Index, nominal and real, using Bureau of Labor Statistics Consumer Price Index less

shelter inflation index).
Region and City Year--> 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 

California 

Bakersfield, CA 47 

Chico, CA 49 

Fresno, CA 58 

Hanford-Corcoran, CA 38 

Los Angeles-Long Beach-Glendale Metro Div, CA 46 49 -20 53 

Madera, CA 57 

Merced, CA 43 

Modesto, CA 32 44 44 

Napa, CA 34 46 

Oxnard-Thousand Oaks-Ventura, CA 39 50 -17 53 

Redding, CA 52 

Riverside-San Bernadino-Ontario, CA 40 -18 58 

Sacramento-Arden-Arcade-Roseville, CA 30 32 47 

Salinas, CA 49 

San Diego-Carlsbad-San Marcos, CA 45 32 55 

San Francisco-San Mateo-Redwd Cty Metro Div, CA 39 54 46 

San Jose-Sunnyvale-Santa Clara, CA 40 49 51 

San Luis Obispo-Paso Robles, CA 44 -16 46 

Santa Barbara-Santa Maria-Goleta, CA 34 53 

Santa Cruz-Watsonville, CA 45 48 

Santa Rosa-Petaluma, CA 41 48 

Stockton, CA 38 

Vallejo-Fairfield, CA 45 

Visalia-Porterville, CA 36 

Yuba City, CA 56 

Other Western Locations 

Bellingham, WA 43 

Bend, OR 32 

Boulder, CO 31 31 

Carson City, NV 44 

Corvallis, OR 36 

Denver-Aurora, CO 35 

Las Vegas-Paradise, NV 43 

Medford, OR 31 

Mount Vernon-Anacortes, WA 37 

Ogden-Clearfield, UT 30 30 

Provo-Orem, UT 34 

Reno-Sparks, NV 41 

Salt Lake City, UT 36 

Seattle-Bellevue-Everett Metro Division, WA 51 38 

Oil Patch 

Anchorage, AK -29 

Austin-Round Rock, TX -25 

Casper, WY -34 

Grand Junction, CO -29 

Houston-Baytown-Sugar Land, TX -22 

Lafayette, LA -39 

Midland, TX -31 

Odessa, TX -24 

Oklahoma City, OK -26 

San Antonio, TX -17 -17 

New England 

Barnstable Town, MA 62 -15 -15 48 

Boston-Quincy Metro Division, MA 74 38 

Bridgeport-Stamford-Norwalk, CT 71 

Burlington-South Burlington, VT 32 

Hartford-West Hartford-East Hartford, CT 61 -17 

Manchester-Nashua, NH 55 -20 -20 35 

New Haven-Milford, CT 76 -16 

Norwich-New London, CT 50 -16 31 

Portland-South Portland-Biddeford, ME 47 30 

Providence-New Bedford-Fall River-Warwick, RI 69 46 

Springfield, MA 63 

Worcester, MA-CT 71 34 

Other Northeast 

Albany-Schenectady-Troy, NY 49 

Allentown-Bethlehem-Easton, PA-NJ 48 

Atlantic City, NJ 40 

Baltimore-Towson, MD 36 

Hagerstown-Martinsburg, MD-WV 30 

Kingston, NY 41 

New York-Wayne-White Plains Metro Division, NY 67 30 33 

Ocean City, NJ 44 

Philadelphia Metro Division, PA 42 30 

Poughkeepsie-Newburgh-Middletown, NY 63 41 

Scranton-Wilkes-Barre-Hazelton, PA 31 

Trenton-Ewing, NJ 61 32 

Virginia Beach-Norfolk-Newport News, VA-NC 31 

Washington-Arlington-Alexandria Metro Div, DC 31 40 

Winchester, VA-WV 35 

Florida 

Cape Coral-Fort Myers, FL 38 

Deltona-Daytona Beach-Ormond Beach, FL 35 

Fort Walton Beach-Crestview-Destin, FL 32 

Miami-Miami Beach-Kendall Metro Division, FL 45 

Naples-Marco Island, FL 35 

Palm Bay-Melbourne-Titusville, FL 43 

Panama City-Lynn Haven, FL 30 

Port St. Lucie-Fort Pierce, FL 54 

Punta Gorda, FL 42 

Sarasota-Bradenton-Venice, FL 37 

Vero Beach, FL 38 

Other 

Honolulu, HI 30 60 -16 35 

Peoria, IL -16 

LEGEND: BOOM = Years where real home prices increased at least 30 percent from 3 years earlier. 

BUST = Years where nominal home prices declined from 5 years earlier.

 (City must include at least one 5-year period where nominal price declined by more than 15 percent.) 

Numbers in bold indicate maximum 3-year real price increase in a boom, or maximum nominal 5-year price decline in a bust; 

duplicate numbers in bold indicate the same maximum was reached in two separate years. 

N/A = Missing price data. 

Source: FDIC Revisited "U.S. Home Prices: Does Bust Always Follow Boom?" May 2, 2005. 

using Bureau of Labor Statistics Consumer Price Index less shelter inflation index). 

Table 1. Historical Evidence of U.S. Home Price Booms and Busts, 1978 - 2004 Accessible Link

FYI (Office of Federal Housing Enterprise Oversight House Price Index, nominal and real,