Where are Real Estate Prices Falling the Most?
By Steve Gillman - 2012
Yes, real estate prices are still falling in many, but not
all areas of the country. But where are they falling the fastest?
Although that is something which is only answered accurately
after the fact, there are projections out there, and there are
the historical trends to look at.
A recent article in Forbes looked at 13 cities which
had big price drops in the last year and are also projected to
suffer big price declines in the coming year, based on research
done by Local Market Monitor. These were chosen as the worst
from over 300 Metropolitan Statistical Areas (MSAs) and Metropolitan
Divisions (MSADs). The data which was used for projecting the
coming declines in real estate prices included population growth,
job growth, rental rates and the pace of home sales.
Many of the cities on the list were also on another list;
that of the most overpriced cities. This makes sense, of course.
If homes are priced too high for the prevailing average wages,
there is probably only one direction for them to go.
The worst projection going forward is for Tucson, Arizona,
with prices expected to fall another 11.1% through September
2012. If that happens, the average home price will be down to
around $151,000, the lowest in many years.
Several cities in California show up on the list, which is
no surprise. The rest of the country watched for years as prices
rose far beyond what any normal jobs could support. But what
is surprising is how affordable some of these places are becoming.
Look at the following data, which shows the drop in prices from
October 2010 to September 2011, the projected drop this year,
and the average home price at the moment...
Previous Year: -8.2%
Coming Year: -8%
Average Price: $152,400
Previous Year: -8.5%
Coming Year: -6.8%
Average Price: $129,700
Previous Year: -11%
Coming Year: -9.9%
Average Price: $154,200
Previous Year: -9.3%
Coming Year: -8.5%
Average Price: $195,900
Other cities that make the list include;
Projected Decline: -8.3%
West Palm Beach, Florida
Projected Decline: -8.7%
Projected Decline: -7.7%
Projected Decline: -9.4%
Projected Decline: -3.3%
Projected Decline: -2.5%
Projected Decline: -7.4%
Las Vegas, Nevada
Projected Decline: -5.1%
The last two are interesting in that they show that falling
real estate prices are not just a function of homes being expensive
to begin with. In Tacoma the average home costs more than $220,000,
but in Las Vegas that average price is already down to just $121,900,
which is one of the lowest on the list. Apparently there are
a lot of cheap condos and other homes on the market.