No Bidding Wars Here: Places Where You Can Find Homes at 2007 Prices

If you’re house hunting right now, you might lay awake at night wishing you had bought a few years ago instead—before prices went bananas and bidding wars came back into vogue. The good news is, in most of the country, you can still pick up a house for less than it would have cost in the mid-2000s.

The national real estate market is unquestionably hot: Buyer demand continues to outpace the available inventory of homes for sale, which drove up prices another 6.9% in the first quarter of this year, according to the National Association of Realtors. And housing headlines in cities like San Francisco conjure images of an unsustainable bubble that’s bound to burst all over again.

But while overall market measures like the Case-Shiller Index show that average home prices nationally have reclaimed and even surpassed their mid-2000s peaks, that recovery has been extremely uneven. In fact, in two-thirds of the country, homes haven’t yet recovered to their pre-recession peaks, according to a new study by real estate website Trulia.

In other words, the hottest markets appear to be inflating the national numbers. While a full 98% of homes in San Francisco and Denver have recovered or surpassed their pre-recession prices, that number is just 34.2% nationwide, and less than 6% of homes have reclaimed their peak value in metros like Las Vegas, Phoenix, Camden, N.J., Fresno and Bakersfield, Calif., Hartford and New Haven, Conn., and much of Florida.

In some spots—particularly those hardest hit by the foreclosure crisis—homes may have been so overpriced at their peak that the road to recovery is simply longer. In Las Vegas, for example, where only 0.6% of homes have recovered to pre-recession levels, the median home price was $214,630 in March, compared to a peak of $306,028. Meanwhile, cities where median home prices barely crested six figures during the housing bubble have had an easier time recovering: In Oklahoma City and Tulsa, Okla., Wichita, Ks., and Buffalo, N.Y., more than 90% of homes have fully recovered their modest pre-recession highs.

But the main correlating factors in whether a city had reclaimed its peak home values appeared to be income growth and population growth. “Housing is what economists call a ‘normal good,’ so when incomes rise, households tend to spend more on housing, which pushes up prices,” said Trulia chief economist Ralph McLaughlin. Meanwhile, an expanding population also puts upward pressure on demand for homes.

So despite jaw-dropping median prices in high-income cities like New York, Seattle, and San Francisco, income growth in many other parts of the country just hasn’t been sufficient to support fast-rising home prices. In fact, median income in Las Vegas actually fell 5.2% since 2009.

If you’re looking for a bargain, check out Trulia’s data on all 100 metro areas it studied (or drill down to the ZIP code level here); many pricey cities that have mostly or completely bounced back have slow-to-recover markets nearby.

An hour outside of Boston, for example, just a fraction of homes have reclaimed their peaks in Worcester, Mass. (8.1%), and Providence, R.I. (7.2%). Outside New York City, less than 7% of homes are back to their pre-recession levels in Newark, N.J. and in Fairfield County, Conn. And there’s a reason Bay Area home buyers keep looking in Sacramento: More than 90% of homes in the California capital are priced below peak levels.