Home Value Loss Now but Increased Pricing Expected in 2010

By Phoebe Chongchua, Realty Times
There’s bad news and good news coming out of the housing market. Forbes Magazine released study results by Local Market Monitor that showed the cities that lost the most value are concentrated in some areas of California, Florida, Nevada, and the Northeast.

These cities were impacted by local and national factors such as increased unemployment and the rising cost of housing which resulted in homebuyers gambling on the odds of whether they could afford long-term housing.

West Coast housing markets fared the worst, losing the most value—21.6 percent since their peak. Florida housing lost 31 percent, the Northeast lost an average of 8.6 percent, and the Midwest lost, on average, 5.6 percent. The top five cities to lose value in the West (most in California): in California--Merced, (-62.11 percent), Stockton (-54.29), Modesto (-52.42), Vallejo-Fairfield (-47.62), and in Nevada—Las Vegas-Paradise (-47.53) In the South, the top five cities to lose the most value are located in Florida: Port St. Lucie (-46.43), Cape Coral-Fort-Myers (-46.38), Naples-Marco Island (-43.63), Bradenton-Sarasota-Venice (-41.52), and Fort Lauderdale-Pompano Beach-Deerfield Beach (-39.93).

In the Northeast, the top five cities to lose value are: Providence-New Bedford, R.I. (-17.30), Worcester, Mass. (-16.17), Atlantic City, N.J. (-16.15), Poughkeepsie-Newburgh, N.Y. (-14.60), and Barnstable Town, Mass. (-14.48).

Moving to the Midwest, the top five cities to lose value are in Michigan: Detroit-Livonia (-30.66), Warren-Troy-Farmington Hills (-27.95), Flint (-27.47), Ann Arbor (-20.37), and Jackson (-17.30). Source: Forbes, Francesca, Levy (12/21/2009).

According to First American CoreLogic’s LoanPerformance Home Price Index, home prices are expected to fall another 4.2 percent in 45 of the largest housing markets before hitting bottom. The Press Release states that, “The declines will be driven primarily by the large levels of foreclosures in these areas. However, improvement in both levels of inventories and unemployment are projected to prevail in the spring of next year, resulting in an average year-over-year appreciation of just under one percent by October of 2010 for these metropolitan markets.

The report also stated that, “In August 2010, the index is projecting that 12-month appreciation for national home prices will be 4.6 percent and that home prices in two of the most depressed markets, California and Florida, will show gains in excess of 7 percent.” Cities that are projected to experience the strongest recovery in 2010 are primarily concentrated in the large urban areas of California: San Francisco (+5.7 percent), Los Angeles (+5 percent), San Diego (+4.7 percent) and Sacramento (+4.6 percent).

The report cautions that a large inventory of homes owned by banks but not yet on the market could affect the increased pricing progress. Mark Fleming, chief economist for First American CoreLogic stated in a December Press Release, "We are continuing to see improvements in the year-over-year home price change as prices have remained relatively stable since April. The additional government support for the housing market has stimulated demand and restricted supply in 2009.” However, Fleming, added, “How these government supports are removed in 2010 and the moderation of pending inventory and negative equity will be critical to the continued stability of the housing market.”