The U.S. house price index , which measures the price of residential housing, gradually increased from a base value of 100 in the first quarter of 1991 to its peak of 223.97 in the third quarter of 2006. This value is more than double that from the first quarter of 1991. While there was a gradual increase in the index during this 15 year time span, it accelerated from a value of 136.58 in 2000 to 223.97 in 2006. This represents an increase of over 60 percent, compared to an increase of less than 40 percent during the previous 10 years (1990-2000). After 2006, the price index of the housing market began to decrease. By the first quarter of 2012, the price index dropped to 179.44, about the same level observed during the first quarter of 2004.
The housing indexes from the first quarter of 1991 to the first quarter of 2012 for the whole US as well as the East North Central (Michigan, Wisconsin, Illinois, Indiana, Ohio), Pacific (Hawaii, Alaska, Washington, Oregon, California) , and New England (Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut) regions are presented above.
The graph shows there was a slight decline in the housing indices for the Pacific and New England regions from 1991 until about 1993. From there, the market began to level out until increases started to be seen around 1996. The housing indices for all regions shown on the graph then started to climb, and they reached their peaks in 2006. The country as a whole reached its peak index in 2007. The highest point in the Pacific region was 280.53 in the second quarter of 2006. This is almost triple the housing index price in the first quarter of 1991. Despite the Pacific region having the highest housing price index, it also had the greatest decline following its peak in 2006. In less than two years, the index plummeted to 187.93 in the first quarter 2008, losing about one third of its value. Overall, the East North Central region experienced fewer fluctuations than any other area represented on the graph.
Compared to the nationwide trend, Michigan’s housing index value has been more mild. Michigan, however, like other states and regions in the U.S., experienced a decline in housing prices after 2006. This decline continued through the 2009 economic crisis and into 2010, despite a slight increase in value in 2009. The housing price index in Michigan hit its all time low in 2011. The housing index in Michigan is currently at 139.66, 40 percent higher than its value in 1991. This current index is approximately the same as that from 1997.
Michigan has one of the 25 largest Metropolitan Statistical Areas in the U.S. This area includes Detroit, Warren, and Livonia. This graph compares the housing price index for the MSA to the state as a whole from the first quarter of 1991 to the first quarter of 2012. The MSA has a trend line that is almost identical to that of the state. Both lines peaked in 2005 at slightly over 200 points in the index, and both have dropped about 70 points since then. Currently, the state is near its 1997 levels and the MSA is near its 1995 levels.
The following graph compares the median house price for the U.S. and Michigan from the first quarter of 2000 to the second quarter of 2010. In 2000, the median price of a house in Michigan was close to the national price; Michigan’s median price was about $120,000 and the national median price was about $126,000. Following the year 2000, however, the gap began to increase, with the national median price increasing steadily while Michigan’s slowly increased through 2005. That year was the peak for Michigan’s median house price; it was about $144,000. At that time, the nation’s median house price was about $212,000 and still increasing. The national median house price reached its peak in 2006 at about $224,000. Following the U.S. peak, a decline in housing prices began and by the second quarter of 2010, the U.S. median housing price had decreased by $43,721 to $180,176. From Michigan’s peak, the median housing price decreased by $48,108 from 2005 to 2010.