A new report by the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, examines previous house price declines in the United States with particular focus on areas that have had the sharpest price declines.
The report concludes that house price downturns tend to be long in duration. The median time required to return to prior peak prices was 10.5 to 20 years. Also, the agency finds that it takes longer for prices to rise from the trough to their former peak than it does to drop from peak to trough. Using FHFA House Price Indexes for metro areas as an example, FHFA estimates that the time from peak to trough is about 3 3/4 years while the median recovery period was 6 2/3 years.