Five Cities Falling from Grace
Well, at least the Bay Area has escaped making this list that popped up on Yahoo: Five Cities With Biggest Decline In Home Values. But California did post two of the top five, and four of the five were in the West. Starting off in the #1 spot is Las
Vegas, which is no surprise. They have been hit particularly hard. There has been a building boom there in the last decade, expanding the boundaries almost as far as they can go. Investors took advantage, buying relatively cheap property. Bad loans were made. Now it is foreclosure hell and prices have dropped almost 25%. When I was there last month I saw housing developments abandoned part way through, leaving early buyers high and dry (and furious). Water is also a big issue here, and will only become worse as time goes on. It will probably be a good 4-6 years before this area really recovers.
Popping up at #2 is another sunshine city, Miami. The lone East Coast city on the list, has experienced a 22% decline in home values. Again, investors tried to take advantage of sunbirds flocking to this warm clime by buying up investment property. Many are now running, not walking, away from homes, According to the Yahoo article, Miami is “believed to have the highest number of vacant condos in the country, according to the National Association of Realtors.” So much for being known for beautiful beaches…
Hot, hot Phoenix isn’t so hot when it comes to real estate. Like Las Vegas, a building boom took place in the last decade, much of it rental property. Prices went through the roof and now have fallen deeper than the basement. They are taking a hard hit with Yahoo Real Estate showing 11,264 foreclosures in Phoenix.
Bringing up the rear in the 4th and 5th spots are Los Angeles and San Diego. That’s right, our southern brethren are taking a harder hit than we are. In all fairness, I think that they are lumping a lot into the L.A. category, not just the city proper. Outlying suburbs factor into this equation, and given the urban sprawl in SoCal, that covers a whole lotta territory. Same thing for San Diego, another sunny town. Home prices area down 24% after being overinflated for too many years.
When will it all stop? Some areas may recover more quickly than others, and I predict that Miami, LA and SD will fare better than LV or Phoenix. But that’s not such a difficult jump to make. It’s the timing of it all that matters. The downward spiral should be slowing now, and hopefully come to some sort of bottom next year. Until then…we certainly will have plenty to write about.
Recent Sweet Digs Posts:
Tri-Valley Sales Update
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