By  Thu Jan 16, 2014

Home Values Down but Inching Up From Recession Levels

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More numbers are being tallied after the collapse of the housing bubble, and in the top five states where home values dropped, the losses are quite dramatic. The five states which posted the highest losses showed ranges from drops in housing values of over $45,000 all the way up to over $100,000 on median home prices—according to data from the U.S. Census Bureau.

The Census Bureau defined two periods of time to compare data. The years between 2007 to 2009 were defined as a three-year recession period, and 2010 through 2012 were marked as a three-year, post-recession period. Across the nation, home values dropped by 9 percent between these two time periods, representing a drop in average home prices from about $191,000 down to around $174,000.

Foreclosures during this time soared as people lost jobs, experienced reductions in wages or couldn’t afford the terms of their mortgages for other reasons, such as bad lending practices. The Census data also reported a drop in home ownership from 66.4 percent down to 64.7 percent as a result of the financial crisis.

California

The biggest loser in average home prices across the country is California, where median property values dropped by $102,600, according to the Census report. Los Angeles, Riverside and San Bernadino counties recorded the highest losses, with Los Angeles County posting a drop in median home prices of $124,100.

Home prices peaked in 2006, and, since that time, Los Angeles County prices have crept up by about 29 percent from the beginning of 2012 through October 2013. However, Los Angeles County homes would need to increase in value by 23 percent to reach peak 2006 prices and by a whopping 53 percent in Riverside and San Bernadino counties.

Nevada

In Nevada, the story is nearly as bleak. Median home prices dropped by $99,400 across the state. The highest rates of fallen prices were in Clark County, where Las Vegas is located. Median home values there were lowered by about 40 percent

Nevada has a high rate of unemployment, which no doubt plays a part in keeping home prices low. According to October 2013 data from the Bureau of Labor Statistics, the state’s unemployment rate is 9.3 percent. The numbers are expected to be updated on January 24, when it might be easier to predict in which direction home values will trend.

Arizona

Nevada’s neighbor to the southeast has also been hit with falling home prices but not quite as substantially. Prices fell in Arizona by about $63,800 for median values—much less than Nevada but still a steep decline. It was enough to leave many homeowners holding underwater mortgages.

The largest declines were in Phoenix and surrounding Maricopa County, where values plummeted by $76,300. This is well above the state average. While prices have been slowly rising, the influx of new home purchases is believed to be by investors, which accounted for 42 percent of overall sales in the Phoenix area.

According to a New York Times report in October, home buying is up in Arizona due to plentiful employment opportunities, but first-time and small-home buyers are having trouble finding homes to purchase. Developers, according to the article, aren’t flocking to build low-priced housing as land prices are high and construction workers harder to find. With mortgage rates on jumbo loans at modest levels, luxury properties remain in demand.

Florida

Florida is home to a great many foreclosure properties after excessive building helped to fuel the housing bubble in that state, so it isn’t surprising that Florida makes the top five states with high declines in home values. Median home prices dropped by about $55,900 across the state, with Miami, and surrounding Dade County, leading the charge at a much higher rate of $91,400.

However, the market in Florida appears to be rebounding since 2011 when values were at their lowest, despite a glut of foreclosure properties. Single-family homes in the Miami/Ft. Lauderdale region jumped in the third quarter of last year by about 21 percent.

Like Arizona, investors account for much of the purchasing activity, which is about 40 percent of all home sales. Homeownership dropped across the state by 2.4 percent which is one of the highest drops in ownership across the country, which averages about 1.7 percent.

Maryland

Between the recession and post-recession periods, home values in Maryland fell by about 14 percent. In Montgomery County, which surrounds the Washington, D.C. metro area, the rate of homeownership dropped by 4 percent, even though Montgomery county’s loss in value of 8.4 percent was less than the state average.

A recent article from the Baltimore Sun reported new home construction was up by 14 percent in 2013 from 2012 activity, suggesting the market there is beginning to rebound. With mortgage rates remaining low, the trend may continue.

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