Market Conditions Continue to Vary Widely
By admin at 15 November, 2009, 6:18 pm
While there’s few markets in the country that have managed to survive the current housing market without any battle scars there’s some markets that have experienced more serious issues than others. One of the worst markets in the United States at the moment are Cleveland & Detroit; however, they are definitely not alone when it comes to markets that are falling with no finish in sight any time soon.
By & giant, the riskiest markets at the moment are those that are experiencing the highest rates of foreclosures. Other factors that are contributing to problem areas include high rates of job loss & slow job growth. Markets in which the number of homes for sale is rapidly rising are also experiencing significant problems. Rapidly rising property values a few short years ago is also proving to be a stumbling block for lots of markets.
During the housing boom these markets commonly experienced property value increases of two-fold & even three-fold in lots of cases. One time the boom ended; however, these markets began to fall & as of yet, they have not hit the bottom. These markets are also at greater risk for problems due to the giant presence of adjustable rate mortgages.
The subprime mortgage market is also more highly concentrated in these areas of the country. Lower interest rates at the time prompted lots of people to rush out & buy homes. Unfortunately, the credit profile of lots of of these buyers was less than sterling. Mortgage loans made in these markets during this time frequently involved subprime, adjustable rate mortgages. As the market began to fall, interest rates began to increase. Today, those same homeowners are finding they can no longer afford their mortgage payments. The result? Foreclosures have risen sharply in market areas where the boom one time allowed housing values to double & even triple practically overnight.
During the housing boom, as prices were escalating quickly, buyers frequently took advantage of adjustable rate mortgages to receive even lower interest rates to make their housing payments more affordable. This was common in areas where first-time home buyers were struggling to afford the rapidly rising prices of homes.
Economic conditions in lots of areas have further fueled the crisis. As the number of layoffs increase, the number of foreclosures & homes for sale seem to increase as well.
At the moment, the ten worst housing markets in the country are Sacramento, New Orleans, Detroit, Riverside-San Bernardino, Las Vegas, Tampa, Miami, Cleveland, Phoenix & Jacksonville, Florida.
Sacramento, considered to be among the top ten of the worst housing markets, has experienced a drop in homes prices that is well above the national average. Like lots of other housing markets in similar situations, Sacramento fell victim to a fast paced market & subsequent plummeting pricing. Today the median home price for homes in Sacramento remains far above other markets in the country, despite the worsening situation. Given the giant number of houses on the market; however, this is far from lovely news.
In spite of the situation in Sacramento; however, it is definitely not the worst case scenario at the moment. That honor goes to Detroit, where market prices have experienced a drop of over 7%. The key factor in Detroit is the giant amounts of layoffs stemming from the auto industry. Matters are not much better in Cleveland where median prices have also dropped by several percent & inventory continues to rise.
While these markets are not showing any signs they will rebound in the near future; there’s some markets; however, which are actually posting increases. Seattle is one such market. Median home prices in Seattle have actually risen 9% in the last year. Other cities on the rise include Raleigh & Charlotte in North Carolina as well as San Jose, Illinois. San Francisco is not far behind, garnering an increase of over 7% in the last year.
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