Slide Show | January 2013
12 Cities Where Home Prices Have Fallen Most
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During the boom and bust years, most of these cities didn't experience the highest highs or lowest lows in home prices. The markets in many of them peaked in 2008 and 2009, two or three years after the national market, and are just now experiencing the last of their price declines as recovery begins.
Sales, supply and other market data reflect the latest available from regional associations of Realtors and multiple-listing services. Months' supply is how long it would take to sell everything listed for sale at the current pace of sales -- a market with four to six months' supply is considered balanced between seller and buyer. Unemployment rates are from the Bureau of Labor Statistics, and foreclosure rates are from RealtyTrac. Distressed sales and negative-equity statistics are from CoreLogic.
Home prices are from Clear Capital, a provider of real estate data and analytics.
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12 Cities Where Home Prices Have Fallen Most
1. Louisville, Ky.
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Median home price: $105,950
Change in price since peak: -26.7%
Unemployment rate (natl. avg. is 7.7%): 7.6%
Foreclosure rate (natl. avg. is 0.40%): 1 in every 448 households (0.22%)
Louisville is wrapping up a mild bust, having experienced a mild boom. Distressed properties (short sales and foreclosures) are just 10.9% of all sales here, and only 7.4% of homeowners with a mortgage are underwater -- that is, they owe more on the loan than their home is worth. That’s about one-third of the national average.
A year ago, Louisville's real estate market was more unsettled and still favored buyers. Now it's more balanced, and properties that sell are of nicer quality. In September, sales in Louisville grew 13% from the year before, and the inventory of homes for sale was about the same as last year. Local agent Paul Ogden says that many homeowners who want to move are renting out their homes in hopes that home prices will bounce back before they sell. Meanwhile, he thinks that younger prospective buyers are skittish and may be holding off after watching longtime homeowners thwarted in their desire to sell their homes at the time or price they wanted. 1. Louisville, Ky.
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12 Cities Where Home Prices Have Fallen Most
2. Columbia, S.C.
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Median home price: $118,000
Change in price since peak: -23.8%
Unemployment rate: 7.4%
Foreclosure rate: 1 in every 786 households (0.13%)
Home sales in the South Carolina capital rose by 29.7% in October 2012. Columbia real estate agent Andy Walker says buyers are returning to the market because they've seen mortgage interest rates rise and then fall to historic lows more than once. "They're afraid to roll the dice another time," he says.
Sellers must contend with 11.1 months' supply of inventory, down from 14.4 months last year. "The months' supply is why our pricing is soft and will continue to be until we clear that stuff," says Walker. Plus, foreclosures account for almost 20% of total sales. Yet sellers received a respectable 94.8% of their original list price.
Walker says investors interested in flipping properties are also dipping their toe in the market now. But long-term investors won't help jack up prices because of the state's property-tax policy, which imposes much higher tax bills on owners of property that they don't occupy. That includes homeowners who would rather rent out their home than sell it, says Walker. 2. Columbia, S.C.
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12 Cities Where Home Prices Have Fallen Most
3. Springfield, Mass.
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Median home price: $180,000
Change in price since peak: -23.5%
Unemployment rate: 7.5%
Foreclosure rate: 1 in every 771 households (0.13%)
Home sales have steadily increased throughout 2012, a good first step in recovery for Hampden County, in western Massachusetts. "Buyers are like, 'Sellers should be begging me for my lowball offer,' ” says local agent Brian Sears. In October 2012, sales in Hampden County jumped by 31.1%. Inventory dropped by 7%, but it's still a buyers' market, with six months' supply. Only the nicest homes receive multiple offers and sell quickly, he says.
Foreclosures account for just 12.6% of total sales, although almost one-third of homeowners with a mortgage are underwater. That suggests a lot of homeowners are hanging tight and holding out for rising prices. Although the local economy is still treading water, the area is affordable, especially compared with the rest of the state. 3. Springfield, Mass.
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12 Cities Where Home Prices Have Fallen Most
4. Baton Rouge, La.
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Median home price: $133,000
Change in price since peak: -13.3%
Unemployment rate: 6.2%
Foreclosure rate: 1 in every 1,073 households (0.09%)
Except for the bump-up in prices after Hurricane Katrina, the housing market in Louisiana's capital traditionally enjoys slow and steady growth, says local agent Linda Gaspard. Baton Rouge's market peaked in early 2009 and then retreated, largely as a result of the recession.
The market feels brisk, says Gaspard. In October, home sales grew by 24.9%. The supply of homes stands at 6.5 months, so the market is close to balanced. Foreclosures were never a big issue here, and in September they were just 13.6% of all sales. 4. Baton Rouge, La.
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12 Cities Where Home Prices Have Fallen Most
5. Scranton/Wilkes-Barre, Penn.
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Median home price: $84,750
Change in price since peak: -15.7%
Unemployment rate: 8.9%
Foreclosure rate: 1 in 4,283 (0.02%)
Scranton/Wilkes-Barre, in northeastern Pennsylvania, has the second most elderly population in the country, and the real estate market here is typically slow and steady. But a soft economy and bloated inventory of homes has depressed home sales. In the third quarter of 2012, sales in the metro area rose by only 3% from the year before. But Allan Hetkowski, with the local board of Realtors, says he is guardedly optimistic that the market has turned the corner. Still, he says, tight lending standards are impeding the recovery. If plans for a high-speed train between Scranton and Hoboken, N.J., come to pass, the metro area's affordability could attract younger newcomers. Developers have already converted office buildings in downtown Scranton to apartments for students at a local medical school.
With 11.5 months' supply, the city has a glut of inventory compared with demand, but at least it's down from 14.1 months' supply last year. Sellers receive just 88% of their original list price, on average. That suggests sellers are still overpricing their homes. Although the metro area has had some fallout from subprime and lax lending, the rate of foreclosure is very low. In the third quarter, 10% of all sales were foreclosures. 5. Scranton/Wilkes-Barre, Penn.
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12 Cities Where Home Prices Have Fallen Most
6. Greensboro, N.C.
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Median home price: $80,000
Change in price since peak: -22.5%
Unemployment rate: 9.3%
Foreclosure rate: 1 in every 996 households (0.10%)
It has been bad news for Greensboro's housing market since the beginning of 2009. A high rate of unemployment means fewer buyers and reduced demand. But at least a few signs are positive for the beginnings of a recovery. In the third quarter, sales in the Greensboro metro area rose by 5.6% compared with last year. And the city's supply of homes has dropped from ten months last year to 8.4 months (which still strongly favors buyers). Also, higher-end homes are beginning to sell again. Sellers are getting 94.3% of their listing price. Distressed properties are just 15% of total sales, about the same as last year. 6. Greensboro, N.C.
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12 Cities Where Home Prices Have Fallen Most
7. Memphis, Tenn.
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Median home price: $89,000
Change in price since peak: -44.5%
Unemployment rate: 8.4%
Foreclosure rate: 1 in every 935 households (0.11%)
Memphis is a national distribution center, with the strong presence of FedEx and UPS. That means as the national economy goes, so goes the economy of Memphis -- and with it the local real estate market. Despite protestations that Memphis isn't like the cities of Arizona, California, Nevada and Florida, home prices fell almost as much in Memphis since the peak as in the notorious boom-and-bust areas. Subprime lenders were busy during the heyday, resulting in a high rate of foreclosure (in October, nearly 30% of sales were distressed properties). Those lenders are mostly gone now.
But local agent Carol Lott says that many borrowers in the metro area still don't have strong credit profiles. Almost one-third of Memphis homeowners with a mortgage are underwater. But the metro area has 5.2 months' supply of homes, so the market is balanced between sellers and buyers. In October 2012, home sales in Memphis rose by 28.1% from the year before. 7. Memphis, Tenn.
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12 Cities Where Home Prices Have Fallen Most
8. Omaha, Neb.
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Median home price: $136,000
Change in price since peak: -10.8%
Unemployment rate: 3.8%
Foreclosure rate: 1 in every 1,417 households (0.07%)
As you might expect in Warren Buffett's hometown, Omaha has a slow, steady and fiscally conservative housing market that was dragged down just a bit by the national housing bust and recession. Despite a relatively small decline in home prices from the peak and an average time on the market of 59 days, local agent Lisa Ritter says would-be sellers are holding back on listing their homes for sale. But once Washington deals with the "fiscal cliff," she says, "I think that this spring we'll see one of the best real estate markets in years."
The rate of unemployment is low and the metro area has a number of tech and insurance companies. And buyers are out looking, finally recognizing that they can buy cheaper than they can rent. In October 2012, home sales in Omaha rose by 16.3% from the year before. Buyers wish they had more to choose from, says Ritter, who notes that inventory is at a ten-year nadir. 8. Omaha, Neb.
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12 Cities Where Home Prices Have Fallen Most
9. Knoxville, Tenn.
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Median home price: $129,900
Change in price since peak: -18.9%
Unemployment rate: 6.1%
Foreclosure rate: 1 in every 1,417 (0.07%)
The real estate market in Knoxville in East Tennessee is busy but difficult, says local agent Amanda Stone. Sellers are demanding too-high prices -- appraisals continue to value homes below sale prices -- and buyers are fickle, feeling that if one deal doesn't work out, they can simply move on to the next one. Subprime lending was big here before the bust, resulting in short sales and foreclosures, which were 17% of all sales in September -- about the same as last year. Stone thinks there are more to come.
In October 2012, sales in Knoxville rose by a whopping 35% from the year before. One-fourth of those were cash sales, usually indicating investor activity. But the metro area still has a glut of supply -- 13 months' worth. Because people who lose their homes must rent, the rental market in Knoxville has been strong and rents have risen over the past year. 9. Knoxville, Tenn.
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12 Cities Where Home Prices Have Fallen Most
10. Toledo, Ohio
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Median home price: $65,000
Change in price since peak: -55.9%
Unemployment rate: 7.2%
Foreclosure rate: 1 in every 295 households (0.34%)
Because homes are super-affordable, investors and home buyers in this northern Ohio city are competing at the low end of the market, and investors usually win, much to the frustration of would-be homeowners, says local agent Barbara Stout. In 2012, sellers with ready-to-go and realistically priced properties began to receive multiple offers. But low appraisals continue to encumber sales.
Toledo's housing market went south in early 2006. Prices since the peak have fallen about as much as in notoriously busted Cape Coral, Fla., and Phoenix. It has the highest rate of foreclosure of the 24 cities. Distressed properties account for about one-fifth of total sales.
But there are signs that a turnaround is at hand. Ford and Chrysler are adding jobs, and home sales have risen consistently throughout 2012 (in October, sales of single-family homes in Toledo rose by 3% compared with the year before). The metro area has 10.3 months' supply of homes, down a bit from last year. Sellers received 93% of their asking price. 10. Toledo, Ohio
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12 Cities Where Home Prices Have Fallen Most
11. Philadelphia
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Median home price: $234,000
Change in price since peak: -23.6%
Unemployment rate: 8.4%
Foreclosure rate: 1 in every 690 households (0.15%)
While almost two-thirds of U.S. cities saw foreclosure activity fall in the third quarter of 2012 compared with the year before, in the Philadelphia metro area it rose by 35%. That doesn't bode well for price appreciation or stability. Economists at the University of Pennsylvania who study the metro area's housing market describe the road to recovery here as an uphill climb. Homes in Philadelphia County (the urban core) seem to be regaining value more quickly than suburban homes, which has been the story in many cities in the U.S.
In the third quarter of 2012, sales in the Philadelphia metro area (which includes Camden, N.J., and Wilmington, Del.) rose by 13.8%. The current ten months' supply of homes is down from a peak of over 20 months in 2010. 11. Philadelphia
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12 Cities Where Home Prices Have Fallen Most
12. Portland, Maine
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Median home price: $161,900
Change in price since peak: -33.9%
Unemployment rate: 5.7%
Foreclosure rate: 1 in every 3,270 households (0.03%)
Portland agent Marie Flaherty says that homes here can sell within a couple weeks of hitting the market. But, she says, sellers must price at the market because buyers won't even look at overpriced properties. In hot neighborhoods, smart sellers may receive multiple offers, and buyers who offer more than list price may still lose out in the bidding.
This metro area has a very low rate of foreclosure. In the three months ending October 31, home sales in Cumberland County (Portland is the county seat) rose by 22.7% from the same period the year before. The supply fell from 11.6 months to 8.1 months -- still a buyer's market. 12. Portland, Maine
