Denver Estate Real
Throughout the country, there have been varying degrees of success, and trouble, within the housing market. Some have certainly fared better than others, and while many are quick to blame the individuals states in which these regions lies as a part of the problem with their housing market, the answer is not always as clear cut as it may seem on the surface.
Denver Estate Real
Numbers don't lie
Denver Estate Real
The most recent report of home prices dropping in cities across the nation is eye opening for several regions, but it doesn't take into account the actual cost of other cities that have almost nowhere else to go with their home prices other than up. Take Detroit, for example, or any major city in the state of Michigan.
Denver Estate Real
Michigan has endured some of the worst economic conditions for more than a decade. The home values in Detroit alone had pretty much reached the lowest point they could possibly go last year. With this in mind, the latest numbers in home value declines don't mention one city from the entire state of Michigan.
While these numbers do not indicate true value from region to region, it does offer indicators of areas throughout the country that are either still facing major hurdles to recovery or are merely feeling the effects that other regions felt during the past few years.
The numbers
For example, Hanford, California had the highest drop in home prices last year, shedding 25.9% of home values. New York City shed 12.9% of its home prices while Miami, Florida dropped 22.5%. The following is a list of major cities and their reported drop in home prices, in order of the most significant drop to least:
Hanford, CA -25.9%
Miami, FL -22.5%
Ft. Lauderdale, FL -21.3%
West Palm Beach, FL -18.5%
Phoenix, AZ -18.5%
Las Vegas, NV -15.4%
Tampa, FL -13.8%
Pensacola, FL -13.6%
Gainesville, FL -13.4%
Suffolk, NY -13.4%
New York, NY -12.9%
Ocean City, NJ -11.8%
Bethesda, MD -11.8%
Deltona, FL -11.1%
Washington, DC -10.7%
Atlantic City, NJ -10.0%
Naples, FL -10.0%
Fort Walton Beach, FL -9.9%
Edison, NJ -9.8%
Minneapolis, MN -9.8%
Orlando, FL -9.0%
Prescott, AZ -8.6%
Los Angeles, CA -8.1%
Salisbury, MD -7.8%
Jacksonville, FL -7.5%
What to take away from these numbers
The numbers are sobering, more so for some regions. Florida has taken the brunt of the housing price collapse and continues to feel the pain of foreclosures and a depressed market. There are many factors that contribute to certain regions faring better, or worse, than others. Unemployment is certainly one of them, but if one is to look to Florida to try and understand what may be causing these drops in home prices, then it would be pertinent to look to Wall Street as well.
Many retirees move to Florida, and many of these retirees also had an enormous percentage of their retirement fund invested in 401k's and the Stock Market. When the recession hit, their savings -or more aptly, their investments- were significantly affected, which led to foreclosures and an exodus from the state.
At least that is one argument. Each state also has its own responsibility for the pressure it has placed on homeowners with continually increasing property taxes and fees. In Suffolk, NY, for example, the property taxes had reached a point in 2005 where many predicted that within ten years, more than half of all residents would be moving out to escape the property tax burden. The same holds true for New Jersey and other states as well.
Looking deep for the answer
The answer to why home prices continue to fall is debatable. Some will argue that the high prices were inflated and needed to come back to reality for many homebuyers. Others will argue that the pressure of foreclosures and unemployment in certain regions has an impact. The third, and perhaps reasonable assumption, is the basic premise of supply and demand.
Currently there are more homes on the market than buyers, which is inevitable going to drive prices down. Any attempt to artificially stimulate the housing market or inflate prices could have drastic consequences. The bottom will be reached and once it does, the value of homes will begin their march back up.
Patience is the key and while it can be difficult for some to stomach, it is the only real answer to surviving this tumultuous and trying time.
David
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