Detroit Home Prices Slide, Foreclosed Properties Dominate Market
A new report puts Detroit at the top of a list of the country's worst real estate markets, and home prices seem to still be sliding.
The study from Clear Capital, a California firm that analyzes real estate data, found that home prices in the Detroit area have dropped 15.5 percent in the last quarter, a plunge almost twice as steep as Milwaukee, the city in second place for lowest housing prices.
Prices fell almost 12 percent for the last year in the metro Detroit area and about 5 percent for the state as a whole.
However, the Standard & Poor's/Case-Shiller home-price index released last week showed that while Detroit's prices declined from October to November of last year, they increased by 3.8 percent compared to last year.
The report also shows sales of distressed homes acquired by banks after foreclosures rose to nearly 10 percent in the last quarter to 51.8 of total sales in Detroit. The study predicts that this market domination by previously foreclosed homes will make it difficult for the housing market to recover lost ground.
Alex Villacorta, director of research and analytics at Clear Capital, said the midwest is more susceptible to seasonal fluctuations than other regions because the impact of the downturn has been so severe.
Villacorta said news of Detroit's fiscal problems could very well be impacting the value of homes in the region.
"In these hard hit areas, a very significant driving force is consumer confidence, when people see headlines proclaiming the fall of Detroit... a lot of that really feeds into the uncertainty of the market place."
He said that positive news of a solid policy addressing the city's financial problems or a new mayoral administration could similarly help restore confidence.
Detroit's losses since its market peak in late 2005 add up to what the report calls "a staggering 77 percent," compared to 73 percent for the entire state of Michigan.
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