The rampant growth and subsequent collapse of the U.S. housing market has had far-reaching consequences that are still felt today. In some cities houses lost more than 60% of their value, decimating local economies. Unfortunately, in many of these areas, things are going to get much worse before they improve. 24/7 Wall St. has identified the ten metropolitan areas where home prices are expected to decrease the most by next year.
These areas will see already depressed home values continue to fall, record foreclosure rates to worsen and jobs continue to suffer.
Most of the metropolitan areas that are projected to undergo the greatest drops in home values by the second quarter of 2012 are also some of the worst-hit by the housing crash of 2006 – 2007. In eight of the ten areas on this list, housing prices have fallen by more than 50% from their peak, compared to a U.S. average drop of 32.3%. While in some areas, investors are recognizing the depressed prices as an opportunity to buy low, the current supply level ensures that these areas still have at least a year of continued decline.
The difference between these cities and those that are projected to start improving is mostly their size. Housing inventories are much smaller in the smaller cities. It is much easier to turn around a small housing market than a much larger one. Five of the metropolitan areas that are expected to continue to lose housing value have populations of a million or more. On the other hand, the metro areas that are projected to recover have only slightly more than 100,000 residents for the most part.
24/7 Wall St. reviewed data from Fiserv on the 384 metropolitan areas to identify the cities where home prices are expected to decline the most from the second quarter of 2011 to the second quarter of 2012. We also included future projected price increases, population, when the metropolitan areas reached their price peaks and unemployment rates, all provided by Fiserv.
These are the cities where home prices are expected to decrease the most by next year.