7. Los Angeles
> 1-yr. home price change: 10.2%
> Price drop through Q2 2012: 40.4%
> Median home price Q2 2012: $345,000
> Unemployment: 9.3%
Los Angeles still suffers from higher unemployment than the U.S. average. That is holding down home prices, which remain about 40% below their peak in the second quarter of 2006. Prices gained 10.2% in 2012 and are well above their low point in the third quarter of 2008. Distressed sales fell to around 35% of single-family home sales in December of 2012, down from nearly 49% in December 2011. As with other cities on this list, as the distressed homes get moved through the system, prices will rise.
> 1-yr. home price change: 10.6%
> Price drop through Q2 2012: 50.4%
> Median home price Q2 2012: $196,000
> Unemployment: 8.1%
Miami home prices peaked in the first quarter of 2007 and fell rapidly in the fourth quarter of 2008. Last year, house prices rose 10.6% in the metropolitan area while unemployment remained slightly above the national average of 7.9% at 8.1%. To a far lower degree than Las Vegas, Miami’s economy has a strong tourism component, but it also serves as a trading hub for Caribbean and Latin American nations. Neither tourism nor trade fared well during the economic downturn. Miami’s housing market suffered from overbuilding as well. Prices remained 50% below their peak through the middle of last year, and the city still has some ways to go to recover fully.
> 1-yr. home price change: 12.2%
> Price drop through Q2 2012: 31.7%
> Median home price Q2 2012: $187,000
> Unemployment: 5.1%
Unemployment in Minneapolis hit a peak of “just” 7.9% in 2009, and the current rate is down to 5.1%, the lowest among these seven cities. House prices rose 12.2% in 2012, reaching a median of $187,000 in the second quarter of last year. Prices peaked in the first quarter of 2006 and had their biggest decline in the first quarter of 2009, around the same time as national unemployment was rapidly rising. Short sales have declined to around 10% in Minneapolis, and foreclosure sales are slightly less than a third of all sales.
4. Las Vegas
> 1-yr. home price change: 12.9%
> Price drop through Q2 2012: 60%
> Median home price Q2 2012: $147,000
> Unemployment: 10%
Las Vegas, like Phoenix, experienced a home building boom that peaked in the first quarter of 2006. Like Detroit, unemployment remains in double digits in the metropolitan area as the local tourism-based economy took a drubbing during the lean years of the Great Recession. Home prices fell 60% from their 2006 peak and have been hindered by the number of distressed properties on the market. Distressed sales comprised 73.6% of all home sales in January of 2012, and that percentage fell to 48.7% this past January.
> 1-yr. home price change: 13.6%
> Price drop through Q2 2012: 53.6%
> Median home price Q2 2012: $45,000
> Unemployment: 10.2%
House prices rose 13.6% in Detroit in 2012, but the median price remains the lowest by far of any of the 20 cities in the Case-Shiller benchmark. One of just a handful of large U.S. cities where unemployment rates remain in double digits, the city has knocked more than 5% off its unemployment rate, but its current rate of around 10% is still higher than the worst periods in some of the other cities on this list. The biggest decline for home prices in Detroit occurred in the second quarter of 2009, with prices falling from a peak in the first quarter of 2006. Foreclosure sales have dropped from around 55% in January of 2012 to around 36% last month.
2. San Francisco
> 1-yr. home price change: 14.4%
> Price drop through Q2 2012: 22.3%
> Median home price Q2 2012: $717,000
> Unemployment: 7.3%
Home prices in San Francisco reached their peak in the first quarter of 2007, although the worst period of decline for the region did not occur until two years later. That does not mean home prices ever got cheap exactly, but they did decline more than 20%. Prices recovered 14.4% in 2012 alone, corresponding with a function of a 1.4 percentage point drop in unemployment. Unlike Phoenix, scarcity of inventory has long been a cause of the high prices here.
> 1-yr. home price change: 23%
> Price drop through Q2 2012: 49.8%
> Median home price Q2 2012: $164,000
> Unemployment: 6.7%
Phoenix house prices rose 23% in 2012, the best among any of the metropolitan areas in the Case-Shiller rankings. The unemployment rate in Phoenix reached an annual peak of 9.3% in 2009, the second lowest peak rate among these seven cities. The problem with housing in Phoenix was not unemployment so much as oversupply. As housing inventory has dwindled and mortgage rates have stayed low, housing prices have risen since 2009. Distressed sales (short sales and foreclosure sales) are lower in Phoenix than in any other city on this list. That is probably the biggest boost to home prices in the Valley of the Sun.