U.S. housing markets over the last several years have been dismal, to say the least. It’s my sad duty to report that the fortunes of the 2012 housing market aren’t looking much brighter, even in areas that have already suffered major losses.
In fact, many of these same markets that have already significantly crashed are expected to fall at least another 10% come 2012, thanks to the quadruple threat of high unemployment numbers, the nonexistent hope of a quick real estate recovery, the fear that home prices will deteriorate even further, and U.S. government intervention that has proven completely ineffectual. (The U.S. government, completely ineffectual? Perish the thought…)
Getting back on topic: 24/7 Wall St. recently did an article for Yahoo! Finance, using data from the Fiserv Case-Shiller Indexes in order to select the top 10 housing markets that are expected to have the largest percent price drop between Q1 2011 and Q1 2012.
No more ado is needed. Here is the list of the top 10 housing markets expected to collapse even further, from greatest drop to least.
- Naples, Florida
Florida, and especially California, show up on this list more than once. Blame the allure of the warm weather, killer beaches, large tourist scene, and number of retirees wanting to call them home. Prices in Naples peaked back in 2006, then rocketed downward at the onset of the housing bubble burst, dropping by a whopping 55%. This city is looking at a home value free-fall more significant than any other major city’s, which is expected to result in an additional 16.6%, or nearly $40,000, drop in home prices by the first quarter of 2012. Sadly, though, Naples may not hit rock-bottom until the fourth quarter of 2012. Brace yourselves for impact.
- Riverside-San Bernardino, California
This industrial city is currently suffering from 3 distinct problems: steeply falling home prices, high home vacancy and rental vacancy rates, and an above-average unemployment rate of 13.7%. Like Naples, this area’s home prices peaked in 2006 and then dropped by 55% later on. The first quarter of 2012 will see Riverside-San Bernardino bottom out — but only after home prices plunge an additional 15.6%, or nearly $30,000.
- Las Vegas, Nevada
The first half of the 2000s was very kind to Vegas. Not so the second half, in which the city saw its home values tumble 42.3% between 2008 and 2011. Since its peak, Vegas home prices have plummeted over 58% — and they’re still nowhere near bottom. The first quarter of 2012 will see an additional drop of 13.9%, then another drop of 6.3% in time for the first quarter of 2013. Bumpy roads will be in the future for a while, apparently.
- Detroit, Michigan
The steadily declining Detroit had a rough time of things even before the housing bubble burst, but the burst certainly hasn’t done the city any favors. Foreclosures, vacancies, and unemployment are rampant, as are home prices that are currently plummeting faster than an elevator without brakes. In point of fact, the median home price in this city ($42,000) is the lowest of all the 385 major metropolitan areas that Case-Shiller tracks. Expect Detroit to hit bottom in the second quarter of 2012, with an additional drop of 13.4% by Q1 2012.
- Merced, California
Already one of the ten poorest major cities in the country thanks to its median income of a meager $42,900, Merced had insult added to injury when it saw its home values plunge by 46.1% back in 2008, a depreciation that was the second-greatest for a city since 1980. Unfortunately, the future doesn’t hold much promise: Home values will probably bottom out in the second quarter of 2012, after another drop of 13.2% by Q1 2012.
- Miami, Florida
If you want to see exhibit A for high unemployment, look no further than Miami — its 13.4% unemployment rate gives it the dubious distinction of having one of the highest unemployment rates of any major American city. Like entries number 1 and 2, Miami home values peaked in 2006, then shot downward by more than 50%. And don’t expect recovery anytime soon, as Case-Shiller predicts a double-whammy of drops — a drop of 13% by Q1 2013, then another drop of 10.1% by Q2 2013 (its bottoming-out point). Were this to happen, then Miami will have suffered the highest depreciation of property values in the country. Not something you want to be known for.
- El Centro, California
This is one place you simply don’t want to be right now. Unemployment currently sits at an overwhelming 28.6%, it’s one of the poorest cities in the nation thanks to its tenth-lowest median income ($43,300 per family), and home values plummeted more than 50% between 2006 and 2011. What’s more, an additional 12.1% drop in home prices is expected between now and Q1 2012, the point where prices should hit bottom. Steer clear.
- Salinas, California
Unfortunately, the fourth biggest decline from peak home value among all major American cities can be found in this small coastal town near San Jose — a drop of more than 61% since 2006, to be precise, with nearly half of this drop happening just in 2009 alone. Currently, unemployment sits at 12.8%, but more layoffs are expected, which should drive home values down even further. The expected price drop is 11.8% by Q2 2012.
- Bethesda, Maryland
Some may be surprised to see this very affluent suburb of Washington, D.C. on this list. I mean, it sports a median family income of $114,100 (the highest in the nation), a median home price of $417,000 (the fifth-highest in the country), and an unemployment rate of only 5.1% (well below the national average of 9.2%). But even well-to-do cities aren’t free of the influence of the housing crisis. That is why Case-Shiller is expecting an 11.5%, or more than $60,000, drop in home prices by Q3 2012, its bottoming-out point.
- Fort Lauderdale, Florida
Florida topped the list, and now it rounds it out as well. Home values have plummeted by close to 50% since they peaked back in 2006, with nearly 30% of that drop-off happening just in 2009. The embattled city won’t be getting good news next year, or even the year after, either. Case-Shiller expects home values to rocket downwards by an extra 11.1% in time for the first quarter of 2012, only to drop again (this time by 8.7%) sometime between 2012 and 2013.
Stephanie Huskey is the resident real estate blogger for Movoto and is thinking Wyoming is looking better and better all the time. Interested in getting her advice on your blog? She’s currently seeking guest blogging opportunities so she can share her knowledge with new communities! You can find her over here at Elance.com.