Cities Where Home Prices Are Collapsing

24/7 Wall St.: Nationally, home prices are projected to decline 4% by the end of this year, according to Fiserv Case-Shiller’s latest report. Most of the country’s largest metropolitan areas will not escape this fate. In fact, in all but 50 of the 384 metropolitan areas examined, home prices are projected to decline at least through the end of the year before they start improving.

Among the regions where home prices are expected to decrease, only 10 are projected to drop by 7.5% or more, with the largest decrease estimated at 12.2%. 24/7 Wall St. reviewed these 10 areas to identify the reasons behind their falling prices.

In most cases, housing prices in these areas are projected to decrease because the areas are not yet considered good investments. This could be because buyers either do not believe home values have fallen far enough, because of relatively weak local economies, or a combination of the two.

Many of the collapsing housing markets already have experienced significant slumps in home prices. In all 10 of the metropolitan areas, housing prices fell by more than 25% since their prerecession peak. Home prices in seven of the 10 metro areas have plummeted more than 50% since their peak.

Home prices in most of these markets will continue dropping next year too. David Stiff, chief economist at Fiserv Case-Shiller, told 24/7 Wall St. that the nation’s housing recovery is not expected to reach full swing until the end of next year — even in the areas that are currently leading the country in recovery. Nationally, home prices are expected to increase much more in 2013 than in 2012, but not for many of the cities on this list.

In addition to large declines in home prices during the recession, most of the cities with the worst housing markets have unemployment rates higher than the national average. Seven of the cities have unemployment rates above the national rate of 8.3% in February 2012. Half of the cities have unemployment rates above 10%.

Finally, foreclosure processing is another factor that appears to be affecting the recovery in these 10 metros. Housing markets that have been able to resell foreclosed homes have done better than those that have not, Stiff explained. “In California, foreclosures are nonjudicial. They don’t go through the courts, so California is further along in liquidating their foreclosure inventory, whereas foreclosures in Florida,” which are further behind in liquidating foreclosures, “are judicial.” Florida has three housing markets that are on this list.

24/7 Wall St.’s Cities Where Home Prices Are Collapsing is based on Fiserv Case-Shiller’s forecast of changes in home prices from the fourth quarter of 2011 to the fourth quarter of 2012. 24/7 Wall St. also included each metropolitan area’s February 2012 unemployment rate and change in home prices from the fourth quarter of 2010 to the fourth quarter of 2011 — both of which were provided by Fiserv Case-Shiller.

Here Are The Cities Where Home Prices Are Collapsing:

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• 10. Ocean City, New Jersey

  <strong>Expected price change</strong>: -7.5% <strong>Unemployment rate</strong>: 11.6% (25th highest) <strong>Change in home prices (2010 Q4 to 2011 Q4)</strong>: -3.1% Read more at <a href="http://247wallst.com/2012/05/09/cities-where-home-prices-are-collapsing/" target="_hplink">24/7 Wall St.</a>

• 9. Las Vegas-Paradise, Nevada

  <strong>Expected price change</strong>: -7.5% <strong>Unemployment rate</strong>: 12.4% (19th highest) <strong>Change in home prices (2010 Q4 to 2011 Q4)</strong>: -9.2% Read more at <a href="http://247wallst.com/2012/05/09/cities-where-home-prices-are-collapsing/" target="_hplink">24/7 Wall St.</a>

• 8. Panama City-Lynn Haven-Panama City Beach, Florida

  <strong>Expected price change</strong>: -7.7% <strong>Unemployment rate</strong>: 8.3% (141st highest) <strong>Change in home prices (2010 Q4 to 2011 Q4)</strong>: -6.8% Read more at <a href="http://247wallst.com/2012/05/09/cities-where-home-prices-are-collapsing/" target="_hplink">24/7 Wall St.</a>

• 7. Flagstaff, Arizona

  <strong>Expected price change</strong>: -7.7% <strong>Unemployment rate</strong>: 8.3% (146th highest) <strong>Change in home prices (2010 Q4 to 2011 Q4)</strong>: -2.0% Read more at <a href="http://247wallst.com/2012/05/09/cities-where-home-prices-are-collapsing/" target="_hplink">24/7 Wall St.</a>

• 6. Merced, California

  <strong>Expected price change</strong>: -7.9% <strong>Unemployment rate</strong>: 17.5% (3rd highest) <strong>Change in home prices (2010 Q4 to 2011 Q4)</strong>: -1.9% Read more at <a href="http://247wallst.com/2012/05/09/cities-where-home-prices-are-collapsing/" target="_hplink">24/7 Wall St.</a>

• 5. Cape Coral-Fort Myers, Florida

  <strong>Expected price change</strong>: -8.0% <strong>Unemployment rate</strong>: 9.6% (63rd highest) <strong>Change in home prices (2010 Q4 to 2011 Q4)</strong>: +3.5% Read more at <a href="http://247wallst.com/2012/05/09/cities-where-home-prices-are-collapsing/" target="_hplink">24/7 Wall St.</a>

• 4. Riverside-San Bernardino-Ontario, California

  <strong>Expected price change</strong>: -8.6% <strong>Unemployment rate</strong>: 12.5% (18th highest) <strong>Change in home prices (2010 Q4 to 2011 Q4)</strong>: -4.1% Read more at <a href="http://247wallst.com/2012/05/09/cities-where-home-prices-are-collapsing/" target="_hplink">24/7 Wall St.</a>

• 3. Naples-Marco Island, Florida

  <strong>Expected price change</strong>: -9.5% <strong>Unemployment rate</strong>: 8.8% (107th highest) <strong>Change in home prices (2010 Q4 to 2011 Q4)</strong>: -0.6% Read more at <a href="http://247wallst.com/2012/05/09/cities-where-home-prices-are-collapsing/" target="_hplink">24/7 Wall St.</a>

• 2. Phoenix-Mesa-Glendale, Arizona

  <strong>Expected price change</strong>: -11.1% <strong>Unemployment rate</strong>: 7.7% (184th highest) <strong>Change in home prices (2010 Q4 to 2011 Q4)</strong>: -1.2% Read more at <a href="http://247wallst.com/2012/05/09/cities-where-home-prices-are-collapsing/" target="_hplink">24/7 Wall St.</a>

• 1. Detroit-Livonia-Dearborn, Michigan

  <strong>Expected price change</strong>: -12.2% <strong>Unemployment rate</strong>: 11.2% (28th highest) <strong>Change in home prices (2010 Q4 to 2011 Q4)</strong>: +9.6% Read more at <a href="http://247wallst.com/2012/05/09/cities-where-home-prices-are-collapsing/" target="_hplink">24/7 Wall St.</a>

Comments

[Foucek]

12:36 AM on 05/15/2012

Right now I am debating- Las Vegas (but then my son says it will dry up), Portland Or, Kissimee, or Austin Tx- I will prob retire(destroyed back) , but my sons are in college and the older is finishing culinary school- Need a place I can buy and afford to live. Any ideas?

[Housing Is Cratering]

07:50 AM on 05/15/2012

Rent now buy later. Housing prices are falling.

[becky bradshaw]

04:56 PM on 05/11/2012

Politics is the dominant factor for the increase in foreclosures. There is a major election this November, maybe the most important ideology test since 1936 (FDR-Alfred Landon).

The Big National Banks (B), the Big Oil companies (O), and the Republican party (R) are for all practical purposes, on the same team (BOR). The Oil companies have manipulated the price of gasoline so that the price stays between $3.50 and $4 per gallon (1). The banks have been foreclosing on about 500,000 homes per month, with a goal of forcing 35-40 million families into shelters (2). The theory is that a rapid bottoming of the housing market is good for property investors.

The prize is November's election. The king-makers believe that causing instability in the economy is good for their chances. If a repeat of 1936 were to occur, when FDR trounced the millionaire oilman from Kansas, Alfred Landon, the polarization of income in our society might be reversed, and that is unthinkable for the BOR Team (3).

1. http://news.yahoo.com/milestone-u-oil-manipulation-case-unsettles-traders-143220249--sector.html
2. http://www.nj.com/business/index.ssf/2012/03/housing_banking_advocates_hail.html
3. http://www.motherjones.com/mojo/2012/02/mind-blowing-charts-senates-income-inequity-hearing

[dnpvd51]

05:16 PM on 05/14/2012

Federal Reserve buying worthless Mortgages. And then we have Mortgage interest deduction.WRONG, WRONG, WRONG!!!

The banks want the debt slaves in the house paying their outsized mortgage payments.

And it is renters and the poor that are paying taxes for all the government programs holding up housing prices. We have Fannie and Freddie and the FHA all giving out loans on easy terms with no skin in the game. We have the Federal Reserve keeping rates too low. We have the Federal Reserve buying worthless mortgages. And then we have the mortgage interest deduction.

[becky bradshaw]

05:53 PM on 05/14/2012

Some of what you say is true, but much of it is gibberish.

Loans are now low because of the market forces (savings interest rates are also very low).  And the Federal Reserve has never bought mortgages. 

[PuSencer]

11:48 AM on 05/11/2012

why is it, in america, we only discuss the financial aspects of these housing markets. aren't vegas and phoenix in pretty water-insecure areas? why don't we discuss this as an important issue as it is everywhere else in the world?

[KarmaPatrol]

09:24 PM on 05/14/2012

Shhhh. Because housing in those areas will really get distressed. Being from the desert Southwest, it's best to talk about those things only before watering season (yes, people still have lawns and pools) and then, only in the local papers.

[Andrew Harvey]

01:33 AM on 05/11/2012

This is great, maybe I can finally afford a house!!!

[Tom95134]

01:26 AM on 05/11/2012

Forget the "collapsing" home prices in California. They are still expensive to buy.

Flagstaff would be nice. But if you want to bet on the future, buy more than one property (adjacent) in or around Detroit. Remodel/rebuild and just wait.

[specultr]

01:34 AM on 05/11/2012

LA doesn't look that cheap to me: http://research.stlouisfed.org/fred2/series/LXXRSA?cid=32261

But look at Las Vegas: http://research.stlouisfed.org/fred2/series/LVXRSA?cid=32261
The price level has gone down to about the level of 1990.

[Foucek]

12:37 AM on 05/15/2012

L.A is awful really expensive-and I rent.I am leaving asap.

[Foucek]

12:37 AM on 05/15/2012

But really bad water shortage-

[KarmaPatrol]

09:25 PM on 05/14/2012

Ports plus plenty of industry/tech/international banking (=high rises full of lawyers) in LA/Bay Area

[edward60]

08:19 PM on 05/10/2012

I sold large 2nd mortgages for Citi Bank to people in those states because they are unregulated. A lot of those people could not even qualify for a credit card, big 2nd mortgage, no problem.

[ta8ersalid]

07:52 PM on 05/10/2012

What an article. It says Detroit, dearborn, mi. + 9.6% that is some loss.

[larmarch5]

05:56 PM on 05/10/2012

What were the prices in these areas five years BEFORE they peaked in 2005? This is all about timing. For example: In 2000, our homes in our area sold for $325K, in 2004 for $880K, and now $700K.

[AKansasComment]

05:24 PM on 05/10/2012

Only -12% for Detroit? They're better than I thought.

[Drama Llama]

06:07 PM on 05/10/2012

I have had two of my buddies in Technology leave town and get job offers from Detroit.. Not sure what is going on up there but maybe they are finally turning it around.

HAHA... though how bad is it when -12% home values has you going "Hey that is pretty good"

[Jerry Vasquez]

04:34 PM on 05/10/2012

Skimming over this article, I noticed that just about all of the cities are in red states.
Even the portions in California are in the central valley areas , which is home to the red part
of the state. A coincidence?, I think not.

[Von Laue]

05:35 PM on 05/10/2012

Did you know that their is a correlation between ice cream sales and larcenies within certain parts of the US. A coincidence? I think not.

[Jerry Vasquez]

05:51 PM on 05/10/2012

if you say so

[hammhome]

07:29 PM on 05/10/2012

skimming is right.....the states mentioned....New Jersey, California, Nevada, and Michigan are Blue......Arizona and Florida are "TossUps"....according to RCP.....Not one were classified as a Red State......as far as the red parts of CA, ever consider that all those blue people on the coast not only couldn't care less about the central valley they don't even know it exists unless they are driving from SF to Yosemite....

[ta8ersalid]

07:53 PM on 05/10/2012

Cough.....cough...Arizona made the list.

[RobJames]

11:07 PM on 05/10/2012

I live in Ft Myers, FL. It's very RED.

[Mirriam Egglebrecht]

04:31 PM on 05/10/2012

A good liberal city like Detroit is looking mighty appetizing right about now.

[WinslowWong]

05:35 PM on 05/10/2012

Did you accidentally forget to use the sarcasm font?

[larmarch5]

05:52 PM on 05/10/2012

My cousin's son-in-law just got a big promotion to relocate to Detroit. He has worked for GM for several years. His grown daughter was already working in Detroit.  A friend of mine got ahead of the curve in Boston back in the 90's by buying a townhouse in a depressed area. In 2000, she sold it for about 5 times what she had in it.

[Mirriam Egglebrecht]

05:59 PM on 05/10/2012

Well I hope it works out for them. And I hope they have weapons.

[aliceinanthem]

04:21 PM on 05/10/2012

Guess this article is out of date already. They are basing their projection from Q4 and it's already changing. Phoenix is going up and multiple offers are on the table.

[DLocke]

05:18 PM on 05/10/2012

Very true. I've been house hunting in Phoenix for a few months now and every house I've put in on has received multiple offers and has sold well over the asking price.

[specultr]

01:28 AM on 05/11/2012

Phoenix has improved over the last 6 months or so according to Case-Shiller, but it still looks depressed:

http://research.stlouisfed.org/fred2/series/PHXRSA?cid=32261

[Don Celestino]

03:55 PM on 05/10/2012

Phoenix is listed at number 2. I purchased a condo in Phoenix in January 2011 ($27,750.00), rented it for a year and sold it 1 month ago ($43,750.00). My Realtor in Phoenix tells me of multiple offers, many exceeding list price on homes $150K and under. My condo had multiple offers over the first weekend for sale. I hope Case-Shiller is correct as I will be eager to buy in again if prices are indeed falling, but I am not seeing this in Phoenix right now.

[rjlwis]

03:45 PM on 05/10/2012

What's funnier are GOP politicians running on the idea that property taxes have gone down. Yes, because the property values have slumped. That's some warped reasoning there...

[ta8ersalid]

07:54 PM on 05/10/2012

Values are down, but taxes have stayed the same.

[cavegal]

08:53 PM on 05/10/2012

But the $$ amount collected on those taxes has gone down due to the lower values of the homes.  States like Texas have no state taxes on income and rely heavily on their high (percentage wise) property tax rates to raise all of the revenue required to provide State government services such police and fire protection.

[Tom Hofstad]

04:33 PM on 05/12/2012

Here in CA taxes are a % of assessed value - mine have gone down 3 yrs in 4!
A lot of people were hurt by the bubble, both in the expansion and in the pop, but at least the prices are more realistic now so IF the banks would loan instead of buying T Bills, we would be growing a whole lot faster!

[HenHouse]

03:41 PM on 05/10/2012

Sales prices have depreciated 59.7% over the last 5 years in Phoenix. (peak June 2006) with another 11% in this report projected for the #2 worst cities. Food and Energy and Water prices are up. Wages stagnant in a 'right to work' state. Still 100 consecutive days each year over 100 degrees day and 90 night. Does this explain the angry politics of blame we see in AZ?