Was 2025 the Housing Market ‘Crash’ This Cycle?

Whereas final 12 months was the worst 12 months for the reason that GFC by way of dwelling value progress, 2026 is slated to be one other typical UP 12 months for the housing market.

Some retailers like Redfin have already referred to it because the “Nice Housing Reset,” anticipating value normalization as housing affordability lastly improves.

Lengthy story brief, incomes are anticipated to outpace dwelling value beneficial properties, and paired with decrease mortgage charges, the housing market can start to heal.

However that’s attention-grabbing is dwelling costs didn’t seem to go down a lot regardless of the mortgage charge shock of the previous few years.

And the 12 months 2025 was reportedly the worst 12 months for dwelling costs for the reason that GFC, however is now apparently behind us.

Dwelling Costs Rose Much less Than 1% in 2025

First issues first. Dwelling costs elevated simply 0.9% from December 2024 to December 2025, per the most recent report from Cotality (previously CoreLogic).

The corporate identified that it was “one of many softest charges for the reason that post-Nice Recession restoration.”

I dig some digging to ballpark dwelling value beneficial properties for the reason that prior cycle peak in 2006 and located it to be true.

That is what annual dwelling value progress appeared like primarily based on my findings:

2025: ~1% (lowest since GFC restoration)
2024: ~4–6%
2023: ~5–6%
2022: ~6–11%
2021: ~18–19%
2020: ~6–11%
2019: ~5%
2018: ~5–6%
2017: ~6–7%
2016: ~5%
2015: ~5%
2014: ~4–5%
2013: ~7–8%
2012: ~3–5%

As you may see, dwelling costs elevated yearly since 2012. It’s been a pleasant run.

The 12 months 2012 was the primary successful 12 months for the housing market post-GFC.

Previous to that, dwelling costs fell yearly from 2007 via 2011 earlier than recovering.

And as said, they peaked round mid-2006 earlier than the crash started.

Final 12 months marked the worst 12 months since, although costs nonetheless eked out a small acquire.

Dwelling Costs Anticipated to Rise Almost 5% in 2026

However now it seems to be enterprise as regular for the housing market once more, with Cotality forecasting a 4.5% rise in dwelling costs this 12 months (from Dec. 2025 – Dec. 2026).

That might be squarely consistent with the standard annual acquire in dwelling costs between 3-5%.

So does that imply the housing market already hit all-time low this cycle? That 2025 was the crash?

Or at the very least the worst 12 months this cycle and the worst for the reason that GFC. And with dwelling costs now anticipated to rise once more, that the worst is behind us?

I in all probability wouldn’t get too far forward of myself right here nor would I simply take the forecast at face worth with out a grain of salt.

However it’s doable that we see dwelling costs flip increased once more, dwelling gross sales quantity improve, and affordability enhance.

Simply notice that this restoration “will rely closely on wage progress and the way quickly patrons regain the buying energy wanted to fulfill sellers’ pricing thresholds, per Cotality chief economist Dr. Selma Hepp.

In different phrases, if we see extra layoffs and the next unemployment charge, issues might go sideways (or truly down).

There are plenty of unknowns associated to AI and the way that may shake out for the workforce.

It Might Rely upon the Metropolis and State In Query

As well as, dwelling value beneficial properties (or losses) will rely upon the particular market in query.

Bear in mind, actual property is native and never all markets are successful or shedding proper now.

Per Cotality, the states of New Jersey (+5.5%), Illinois (+5.4%), Nebraska (+5.4%), and Connecticut (+5.1%) have been the strongest dwelling value performers over the previous 12 months, typically on account of an absence of present stock and reasonably priced costs.

In the meantime, we’ve seen unfavourable dwelling value progress in lots of Southern and Western states, together with Arizona, California, Colorado, Florida, and Texas.

Though there are some encouraging indicators in these states as properly with stock dropping in locations like Florida, probably main to cost stabilization this 12 months.

So is the worst behind us already? Is that even doable? Is it inevitable that we’ll expertise one other main housing crash?

Arduous to know, however anticipating one other 2008-style housing crash within the rapid subsequent cycle appears unlikely.

Given how uncommon the 2008 crash was, experiencing one other one proper after can be stunning.

Learn on: Right here’s Why the Housing Market Isn’t Crashing At the moment