It took several years for the U.S. to start recovering from the housing bust, but it finally is. Prices across the U.S. increased by 7.6% between the third quarter of 2011 and the third quarter of 2012. In 120 of the 149 metropolitan areas measured by the National Association of Realtors, median sale prices of homes improved. Some of the hardest-hit markets are seeing housing prices recovery in the double-digits. In Phoenix, where prices fell by 15.7% during the recession, the median price soared by nearly 35% in the past 12 months.
And yet, in recent months, real estate markets in certain large cities across the country aren’t doing as well. Home prices in those cities either continued to fall or have started to drop after a period of improvement. In ten of the largest U.S. metropolitan areas, prices fell by 3% or more in the past 12 months. In Raleigh-Cary, North Carolina, prices sank by 16.1% during that period. Based on housing data provided by the National Association of Realtors and Realtor.com, 24/7 Wall St. reviewed the ten markets to drop significantly in the past 12 months.
The markets doing poorly now fared well during the recession. Prices fell less than the national average of 3.4% during the recession in most of these housing markets. In the case of four of the ten markets, prices actually rose. In the Champaign-Urbana, Illinois metro area, the median home price increased by 2.3% during the recession years. This means, explained Walter Moloney, media representative at Realtor.com, that these declines could only be temporary drops in markets that have been consistently performing above-average. For example, this could be due to fluctuations in the number of foreclosures in a market.
Increased unemployment often accompanies serious home price declines. And never was that more true than during the recession, when home prices fell the most in places such as California, Arizona, Michigan, Florida, and Nevada, all of which had the highest unemployment rates in the nation.
While it isn’t clear whether the price drops in some of these markets will be long-term, one sign that these declines are a product of economic troubles is the job markets in these cities. In seven of these ten biggest declining real estate markets, unemployment either remained the same or rose between August 2011 and August 2012. In that period, national unemployment fell from 9.1% to 8.1%. In the Kingston, New York metro area, where home prices fell by 3.3% in the past 12 months, unemployment rose from 8% to 9.3% during that time.
Based on Realtor.com quarterly median home sale prices for the largest metropolitan statistical areas in the U.S., 24/7 Wall St. identified the ten housing markets with the greatest home value declines between Q3 2011 and Q3 2012. Only 29 of the 149 housing markets provided by The National Association of Realtors fell during that time. NAR also provided annual sales data for each year between 2009 and 2011. For our analysis, we also reviewed unemployment rates from the Bureau of Labor Statistics for August 2011 and August 2012.