Per Yahoo Real Estate:
With home values continuing to plummet across the country, it's become clear that the real estate meltdown is far from over.
Values for single-family homes in 14 major U.S. cities posted double-digit declines from their respective peaks, according to the Standard & Poor's/Case-Shiller Home Price Indices, which tracks prices of single-family homes. On a national level, home values are down 12% since December 2006. And according to Beth Ann Bovino, a senior economist at Standard & Poor's, they could drop another 10% by the end of the year.
"Things are accelerating downwards [and] in most cases the fall gets steeper and steeper every month," says David Blitzer, chairman of the index committee at Standard & Poor's.
The biggest culprit for this downturn: rampant speculation on property values during the past several years. "The areas that have seen a huge amount of speculation...are the ones that got nailed," says Blitzer. "The farther up prices went the farther down they've come." This was especially true in the Sun Belt region. Cities like Las Vegas, Miami and Phoenix, which are popular for either their beaches or deserts, lured investors looking for rental properties that would appreciate in value so they could later sell them to baby boomer retirees for a sizable profit, explains Danielle Babb, a real estate analyst and professor of economics and statistics Northcentral University in Arizona.
Foreclosures have also contributed to the decline in home values. During the first quarter, foreclosures were up 112% from the same period in 2007, according to RealtyTrac, which lists foreclosed properties. As a result, there's now a glut of homes for sale on the market and a lot of very nervous mortgage lenders reluctant to give out loans.
Here are the five cities that have taken the hardest hit in home values.
Everyone in Vegas knows that it pays to have Lady Luck on your side. Unfortunately for home buyers, Lady Luck has come and gone. Single-family-home values in Sin City rose a jaw-dropping 135% between January 2000 and September 2006. But then the winning streak ended. Home values have fallen 24.5% from their peak, the largest decline in the nation, says Blitzer.
Of course, the tables could always turn. "It's still one of the fastest growing cities...and one of the strongest economies in the nation," says Kendra Todd, real estate broker and host of HGTV's "My House is Worth What?"
Miami may be best known for its beaches, nightlife and art scene, but it has recently gained another, albeit dubious, distinction: It's believed to have the highest number of vacant condos in the country, according to the National Association of Realtors.
It wasn't just Miami's condo market that experienced a boom and bust; single-family homes also took a dramatic hit. Speculators who couldn't afford to invest in Miami's pricey luxury condos bought up the more affordable single-family homes in the city, only to abandon them when things got rough, says Standard & Poor's chief economist, David Wyss. That's helped push values of single-family homes 22% lower. "[Miami] doesn't have quite the biggest decline, but it's dropped very far very fast," says Blitzer.
Tumbleweeds aren't exactly taking over the streets of Phoenix, but the city has seen quite an exodus from a couple of years ago when speculators and real estate developers descended on it en masse. More than 67,100 single-family homes were built in Phoenix between 2000 and 2006, according to the Census Bureau, with home values rising by 127%.
Once home values started to unravel, however, speculators started abandoning their rental and investment properties. "People will go to much longer lengths to avoid defaulting on a primary residence than on a secondary home," says Wyss. Now, home values are down 24% from their peak.
Not only has suburban sprawl added to L.A's traffic problems, but it's also a big reason home prices here have fallen by 22% since their October 2006 peak.
Homes that were located as far away as a one- or two-hour drive from the city's center were being pitched to buyers as properties whose values would appreciate as fast as those in the city, says Babb. However, that never happened, she says.
Strong job growth, great weather and a smattering of palm trees: Who wouldn't want to live in San Diego? But what makes a place desirable also tends to make it more expensive. Home values here rose by 150% between January 2000 and December 2005. At its peak, this city had the highest ratio (14 to 1) of median home prices vs. median incomes in the country. Homes here were worth about 14 times the amount of money owners made each year, says Wyss. The national average was 3.4 to 1 — even at the peak of the boom in 2006, he says.
"The expectations for this city — that it was employing rapidly and that everyone wants to move here — got way too high," says Wyss. Home values are now 24% below the peak.
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