On making te Forbes list...

Forbes Names Cities With Biggest Price Drops

 

Cities that experienced housing recessions were affected as much by local economic factors as they were by national ones, according to a study by Local Market Monitor for Forbes magazine. Cities that have lost the most value are concentrated in the Midwest where unemployment has taken its toll, and in parts of California, Florida, and Nevada where the rising cost of housing encouraged home buyers to gamble on their ability to afford housing long term.

On average, housing markets on the West Coast lost the most value - 21.6 percent since their peak. Florida lost 31 percent. The Northeast lost an average of 8.6 percent, and the Midwest on average lost only 5.6 percent (with the big exception being Michigan where the value losses were in the teens or larger in most areas - ed.)

Here are the top five cities in each region that lost the most value:

West
Merced, Calif.: -62.11 percent
Stockton, Calif.: -54.29
Modesto, Calif.: -52.42
Vallejo-Fairfield, Calif.: -47.62
Las Vegas-Paradise, Nev.: -47.53

South
Port St. Lucie, Fla.: -46.43 percent
Cape Coral-Fort-Myers, Fla.: -46.38
Naples-Marco Island, Fla.: -43.63
Bradenton-Sarasota-Venice, Fla.: -41.52
Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. -39.93

Midwest
Detroit-Livonia, Mich., -30.66
Warren-Troy-Farmington Hills, Mich., -27.95
Flint, Mich., -27.47
Ann Arbor, Mich., -20.37
Jackson, Mich., -17.30

Northeast
Providence-New Bedford, R.I., -17.30
Worcester, Mass., -16.17
Atlantic City, N.J., -16.15
Poughkeepsie-Newburgh, N.Y., -14.60
Barnstable Town, Mass., -14.48

- Source: Forbes, Francesca, Levy (12/21/2009). Click here to read the whole article.


Somehow this "news" feels awfully old here in Michigan. Maybe we're just getting so used to bad news that this type of report has become a part of the background noise. There is a tendency to become a bit numb to the continual beat of bad economic news. If there's a bright side to these stories it is to be found in the buyers who are getting great deals at the expense of distressed or foreclosed homeowners.

There are lots of articles that belabor the point that much of this lost value was all an illusion to begin with, caused by an irrational and unsustainable run up of home values after the Internet bubble burst in the late 90's. That's likely true, but it provides little comfort for the people who bought a home with in the last 4-6 years and paid those inflated prices.

Not all of those buyers were greedily overreaching and making bad financing decisions. Many were just regular folks who needed to move or wanted to move and who believed the conventional wisdom of the time that real estate always goes up in value. Boy, was that bad wisdom. Depending upon which reports one reads the U.S. has lost between $4-7 Trillion worth of real estate value in the last few years. While it could be viewed as paper losses by most, for many it is very real and very painful.

One thing the Forbes article did not do was to predict how much further the value losses will go in the coming year. Locally, it "feels" like the rate of loss has slowed. I have been telling people that we are losing 1.0 to 1.5% of value per month, but now we seem to be down to .75 - 1.0% per month, which is still significant, but which gives some hope that we're nearing the bottom of this process and about to turn things around and get back to positive appreciation again. Hopefully, when that happens, the appreciation will be at more modest and sustainable pace than it was prior to the bust.

What has been the value loss in your area and how's it look for 2010?