U.S. Markets Where Home Prices Most Likely To Decline

Home Inspector with Florida Healthy Home Inspections
U.S. Markets Where Home Prices
Are Most Likely to Decline

By Lauren Baier Kim

Here's a look at what's new in real-estate markets across the U.S. from around the Web. (Some links may require registration or subscriptions.)

California, Northeast most at risk for price declines

Over the next two years, housing markets in California and the Northeast are the likeliest to see declines in home prices, according to PMI Mortgage Insurance Co.'s U.S. Market Risk Index, released last week. Showing the highest risk for drops in housing prices is the Sacramento, Calif., metro area (Sacramento-Arden-Arcade-Roseville, Calif.) which has a 60.4% chance of seeing price declines, according to the report. Next on PMI's list of markets headed for a fall are the San Diego and Oakland, Calif., metro areas, which both have a 60.3% risk of exhibiting price declines, PMI says. On the East Coast, New York's Long Island (Nassau-Suffolk counties) is the most likely -- 60.1% -- to see housing-price declines, followed by Boston-Quincy, Mass., at 59.5%, according to the report. The least likely to see falling home prices: Pittsburgh, Pa., with a risk of 6.2%, and the Indianapolis-Carmel, Ind., metro area, with a 6.4% chance, PMI says. The report also provides data on home-price appreciation -- Miami showed the most appreciation in home prices between the third quarters of 2005 and 2006: 20%, according to PMI, whereas, Cambridge, Mass., Warren, Mich., and Detroit, Mich., were the only three metro areas surveyed by PMI that saw year-over-year price declines between 2005 and 2006. The index ranks Fort Lauderdale, Fla., as the least affordable housing market and Fort Worth, Texas, as the most affordable.

Markets with large price spreads

Miami has the biggest gap between its most expensive housing and its least pricey homes, according to a new study released by BusinessWeek.com. The report includes a slide show that shows the home-price inequality in 20 metropolitan areas across the U.S. In Florida's Miami-Miami Beach-Kendall region, a house at the 99th percentile ($2.2 million) -- where only 1% of homes are more expensive -- costs 6.5 times more than a home at the area's median price of $346,000 -- the point where half of the area's housing is pricier and half is less expensive, BusinessWeek.com says. The region that has the smallest price disparity between its most expensive and least expensive housing is Silicon Valley (San Jose-Sunnyvale-Santa Clara, Calif.), according to the study. Which doesn't make the area affordable -- there, a home in the 99th percentile costs $2.5 million and its median price is $745,000.

Real estate hot in Utah

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The housing slowdown hasn't hit the Utah Valley -- home to the cities of Provo and Orem, Utah. In the valley, the median price jumped 33%, from $160,000 at the conclusion of 2004 to $213,075 in 2006, according to an article published by the Deseret Morning News. More homes in the valley are selling at higher price tags, with 368 properties purchased for $500,000 or more last year, up from 95 three years ago, the article says. New construction is pushing up local housing prices, the paper says, with home builders charging more for their lots -- at one local subdivision a lot comparable to one sold for $75,000 in 2004 recently sold for $149,500, Deseret Morning News says. However, despite the recent run-up in prices, one local real-estate agent quoted in the article expects local housing prices to level off. "Our market is beginning to settle, to stabilize a bit," the agent is quoted as saying.

Massachusetts market hits a 10-year low

Last year, Massachusetts saw its worst housing market in a decade, where the number of homes sold was 41,593, the state's lowest total since 1996, according to a Boston Globe news article. This year, housing prices in the state will continue to decline, the newspaper says. Yet, 2006 sales of condos in the state bucked the downward trend, nearly reaching 2005's record total of condos sold, the article says. In December, condo prices statewide rose 1.9% from a year ago, the newspaper says. With single-family homes costing $1 million or more in downtown Boston, condos present a more affordable option for many home buyers, the article says. Currently, it should take more than 10 months -- up two months from last year -- to sell a home in the current market, as a high inventory of properties for sale give buyers many properties from which to choose, the Globe says. Contributing to the glut of homes for sale are investors looking to unload their properties, homeowners faced with foreclosure or struggling with home-loan payments, and empty-nesters looking to downsize, the paper says.

Prices up, sales down in South Florida

With the exception of the West Palm Beach-Boca Raton area, year-end home prices were up across South Florida at the close of 2006, despite large drops in the number of homes sold, according to The South Florida Business Journal. Among the South Florida median price rises reported by the newspaper, Miami's year-over-year increase was greatest -- 7% -- from a median price of $351,200 to $375,800, despite a 21% decrease in the number of homes sold, the Journal says. The median price for a single-family home in Fort Lauderdale rose 2% to $367,800 from $361,100, despite a 26% fall in the number of homes sold from the year before, the Journal says. West Palm Beach-Boca Raton's median home price slipped 1%, while its number of homes sold fell 37% from the same period a year earlier, the paper says. For sales of existing condos, median prices jumped 14% to $220,400 in West Palm Beach-Boca Raton from the year before, while the number of units sold dropped 28%, the Journal says. Fort Lauderdale saw the median price for existing condos increase 10% to $208,600 and sales decrease by 32%, while Miami's median price rose just 1% to $257,500 and the number of condos sold drop fell 24%, the Journal says.

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