10 Housing Markets That Will Collapse This Year

The real estate market is already in the deepest depression in modern U.S. history. If you think it can’t get any worse, think again.

In several cities, the real estate market is about to drop even more. Home values in many of those cities, such as Las Vegas, have already collapsed as unemployment has shot higher. And with no hope of quick recovery, housing prices are expected to continue to fall. 24/7 Wall St. identified ten housing markets that are expected to drop by at least another 10 percent by 2012.

Methodology: We used data from the Fiserv Case-Shiller Indexes, which track real estate activity in 380 cities. We selected those that are forecast to have the largest percent price drop between the first quarter of this year and the first quarter of next. We added several other pieces of information to our city-by-city information, including June unemployment levels, median household income, and when home prices are expected to reach their troughs in each market.

Median household income in these cities tended to be near the U.S. median, and in some cases well below. We expected to find high unemployment in these cities. This turned out to be the case. In all but one of the cities we examined, unemployment was well above the national average. The rate was over 18 percent in two of the cities. This link between unemployment and expected future drop in home prices shows again how insidious the housing price problem is.

Home prices fell from all-time highs in 2006. Home equity tapped by second mortgages had been a tremendous source of income then for families who used it for retirement saving, education, and simple consumer purchases. Three years later, many of those homes were worth less than their mortgages. A large population of homeowners still owed a second mortgage. The burden of those two home loans happened to come at a time when national unemployment rose from 4 percent in the mid-2000s to 10 percent. The mix of unemployment and high mortgage payments ripped the home market apart.

The ten markets on the 24/7 Wall St. list of “Housing Markets That Will Collapse This Year,” and several other like them, may not see a full recovery in home prices for years. Inventories in these markets tend to be large. Demand tends to be low as the unemployed cannot be buyers. Finally, fear of further price drops all exacerbate the problem. No person or organization, including the federal government, has been able to help support the housing market, although the administration has tried. Not a single plan has built even a thin net under home values, despite the best efforts of the best economic minds in the world.

10. Fort Lauderdale, Fla.
Expected price drop: -11.1 percent
Median family income: $58,800 (194th highest)
Unemployment rate: 11.8 percent
Median home price: $196,000 (55th highest)
Projected to hit lowest level: Q2 2013

Since 2006, home prices in Fort Lauderdale have dropped by nearly 50 percent. A full 28 percent of that drop occurred in 2009 alone. As was the case throughout most of Florida, the collapse of the housing bubble decimated the construction-based economy. The unemployment rate of nearly 12 percent is evident of the construction sector’s disastrous decline. The value of the 686,000 homes in the Fort Lauderdale area is expected to get even worse through at least the second quarter of 2013. Between Q1 2011 and Q1 2012, the median home price is projected to decline an additional 11.1 percent. Between 2012 and 2013, that number will further decrease by 8.7 percent.

24/7 Wall St.: The 2011 layoff kings

9. Bethesda, Md.
Expected price drop: -11.5 percent
Median family income: $114,100 (the highest)
Unemployment rate: 5.1 percent
Median home price: $417,000 (5th highest)
Projected to hit lowest level: Q3 2012

Bethesda, the extremely wealthy D.C. suburb, has the highest median family income in the country — $114,100. It also has the fifth highest median home price, at $417,000. That position may change, however, as Case-Shiller projects home values will drop by more than $60,000 by next year.

8. Salinas, Calif.
Expected price drop: -11.8 percent
Median family income: $62,100 (145th highest)
Unemployment rate: 12.8 percent
Median home price: $240,000 (34th highest)
Projected to hit lowest level: Q2 2012

Salinas is a small coastal city located 25 miles south of San Jose. Since 2006, the median value of the of the 125,000 houses there decreased in value by more than 61 percent. This is the fourth biggest decline from peak home value among all major American cities. More than 40 percent of this drop occurred in 2009, the year after the housing bubble burst. Unemployment in the city is at 12.8 percent, well above the national average of 9.2 percent. Several companies in the area, including food processing company Romco, expect to continue to lay off workers in the coming months, which should serve to further depress home values.

7. El Centro, Calif.
Expected price drop: -12.1 percent
Median family income: $43,300 (10th lowest)
Unemployment rate: 28.6 percent
Median home price: $130,000 (70th lowest)
Projected to hit lowest level: Q1 2012

El Centro is located five miles from the Mexican border, and is one of the poorest cities in the country. Median income is just $43,300 per family, the tenth-lowest in the U.S. Unemployment is at a staggering 28.6 percent. Between 2006 and 2011, home prices decreased by more than 50 percent. According to a report in the Imperial Valley press, one home was sold in the El Centro area before the recession for $390,000. In 2009, that home was listed at $200,000. Prices are expected to drop an additional 12.1 percent by the first quarter of 2012.

24/7 Wall St.: America’s ten sickest housing markets

6. Miami, Fla.
Expected price drop: -13 percent
Median family income: $47,800 (32nd lowest)
Unemployment rate: 13.4 percent
Median home price: $175,000 (76th highest)
Projected to hit lowest level: Q2 2013

At 13.4 percent, Miami has one of the highest unemployment rates of any major American city. Home values are above average, but are down by more than 50 percent since 2006. Partially as a result of the staggering unemployment rate, the value of the city’s homes are projected to decrease by another 13 percent by the first quarter of 2013. What’s more disturbing, prices will then likely fall an additional 10.1 percent. If this second drop occurs, it will be by far the greatest depreciation of property values in the country in an area already decimated by current low prices.

5. Merced, Calif.
Expected price drop: -13.2 percent
Median family income: $42,900 (8th lowest)
Unemployment rate: 18.6 percent
Median home price: $112,000 (38th lowest)
Projected to hit lowest level: Q2 2012

Merced has a median family income of just $42,900, placing it among the ten poorest major cities in the country. In 2008, the city’s property lost 46.1 percent of its value. This was the second-greatest depreciation in home value for a city since at least 1980. The city’s median home prices are expected to drop an additional 13.2 percent by the beginning of next year.

4. Detroit, Mich,
Expected price drop: -13.4 percent
Median family income: $49,000 (47th lowest)
Unemployment rate: 12.7 percent
Median home price: $42,000 (the lowest median home price)
Projected to hit lowest level: Q2 2012

Since the recession began, Detroit has been the horror story for plummeting home values, foreclosures, vacancies, and unemployment. To date, Detroit’s median home price of $42,000 is the lowest among all 385 major metropolitan areas. While the motor city has been languishing for some time before the recession, the drop in home value has been more steady, as opposed to the rapid drop-offs seen in cities in Florida, Nevada, and California. Detroit’s already record-low values are expected to drop an additional 13.4 percent by the first quarter of 2012.

3. Las Vegas, Nev.
Expected price drop: -13.9 percent
Median family income: $58,900 (196th lowest)
Unemployment rate: 12.4 percent
Median home price: $140,000 (90th lowest)
Projected to hit lowest level: Q4 2012

Las Vegas was one of the center points of the meteoric growth in the first half of the 2000s, only to be followed by a catastrophic fall in the second half. Between 2008 and 2011, home prices in the city dropped by 42.3 percent, the second greatest decline in the country. Although home values in the city are already more than 58 percent off their peak, they are projected by Case-Shiller to drop an additional 13.9 percent by Q1 2012, and then 6.3 percent more by Q1 2013.

2. Riverside-San Bernardino, Calif.
Expected price drop: -15.6 percent
Median family income: $59,700 (190th highest)
Unemployment rate: 13.7 percent
Median home price: $181,000 (70th highest)
Projected to hit lowest level: Q1 2012

Like so many industrial cities in California, Riverside-San Bernadino is being affected by the recession and housing crisis more than most other parts of the U.S. Unemployment has hit 13.7 percent, home vacancy and rental vacancy rates are high, and home values are plummeting. Median home prices are down more than 55 percent from their peak in 2006. By the beginning of next year, prices are expected to drop an additional 15.6 percent, or nearly $30,000.

1. Naples, Fla.
Expected price drop: -16.6 percent
Median family income: $62,800 (137th highest)
Unemployment rate: 10.5 percent
Median home price: $225,000 (40th highest)
Projected to hit lowest level: Q4 2012

Like much of southwest Florida, Naples was one of the fastest-growing communities in the country as it prepared for the millions of baby boomers on the cusp of retirement. When the housing bubble burst, however, the thousands of construction projects for condominiums and retirement communities were halted or lost money, and home values plummeted. From peak home value in 2006, prices dropped by 55 percent. They are expected to keep falling through next year more than any major city in the country. By Q1 2012, home values will drop an additional 16.6 percent, or nearly $40,000.

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  • by Anonymous on Aug 13, 2011 at 11:02 PM
    Refinancing means taking out a new mortgage with a lower interest rate to pay off your existing mortgage, search online for "123 Refinance" I got 2.831% rate on refinance! you should know your rate before you find a company. Learn the secrets and tips about refinance
  • by Wolfgang Location: Chocowinity,NC on Aug 13, 2011 at 10:45 PM
    This still has to be G W Bush's fault? Some how right Barney Frank - LOL
  • by Anonymous on Aug 13, 2011 at 01:22 PM
    with the exception of Miami all of these are in democrat congressional districts
  • by Chuck WireWiggler Location: ChazWorld, Hyde Branch on Aug 13, 2011 at 11:23 AM
    Is there any possible chance that the Left/socialist-leaning people are killing the houseing market, so that they can create a whole new program. Something like houseing for the "people", a completely new system. Hey afterall the houses are "just setting there empty", might as well let the poor live in them, right. Oh that's right this administration is ALREADY gearing up that program. Free medical, free houseing, free cell phones, free internet, free taxi rides when I need them, free food, could life get any better, wow, All I have to do is nothing but vote.
  • by Superdave Location: Greenville on Aug 13, 2011 at 07:10 AM
    Enjoy your holiday Mr. President!! America is like the Titanic , slowly sinking as the Captain holds on to the steering wheel and then the water ( Debt ) moves in and consumes the ship. Where are the life boats!!!
    • reply
      by Zzyzx Road on Aug 13, 2011 at 08:04 AM in reply to Superdave
      Where are the life boats? The rats (politicians) got to them first, leaving the American citizen to drown (in the debt they created). Yeah, Mr. President, enjoy your vacation on Martha's Vineyard, and take another sip of your margarita as we slowly go under.
    • reply
      by Whoa! on Aug 13, 2011 at 12:29 PM in reply to Superdave
      Is this the same holiday that ALL the other members of congress are on? The President is but one man, somebody has to be "the guy". It is the Congress and the Senate that make the majority of the decisions.
  • by BOTH PARTYS FAULT Location: USA on Aug 13, 2011 at 06:04 AM
    Too bad NOBODY will admit that it's BOTH partys fault for our malaise!! It will only get worse until we change how we elect our representation!! The status quo will continue regardless of party until lobbyists/PACs are banished. The idiots blaming one party or the other just can't grasp the obvious. 90% of DC are lawyers, 2/3 have a net worth of a million, Does this look like you and your neighborhood? BOTH partys are bought and paid for. ELECTION REFORM NOW!!!! Shouldn't we have more peers in DC??!! Maybe somebody that have had to work for what they have, and not given them by family!!
    • reply
      by uh on Aug 13, 2011 at 10:08 AM in reply to BOTH PARTYS FAULT
      I agree completely with you. These folks who buy into the partisan conflict are distracted. Notice the profitable companies, banks, and individuals are donating to candidates on BOTH sides.
    • reply
      by Wharf Rat on Aug 13, 2011 at 10:19 AM in reply to BOTH PARTYS FAULT
      You are 100% correct, but how can this be changed? The power-mad politicians certainly won`t, and when another is voted in, his agendas mysteriously change. They have us right where they intend to keep us, under their thumbs. Just follow the money, and see who runs this country, and they are all members of the Fleecing of America club. I just don`t see a solution, voting just gives the illusion of freedom.
      • reply
        by Election reform on Aug 13, 2011 at 11:36 AM in reply to Wharf Rat
        Public funded elections would do away with the need to rasie money, thus lobbyists, and the power of PACs would be minimal if at all. 90% of the time the person with the most money wins, regardless of party!! It's impossible for the avg guy to run and win. Either you are a party hack and/or wealthy!! The house spends 2 days per week raising money!! Why aren't they working for us 5 days a week. Big money has corrupted our democracy just like college sports, etc.!! Democracy is supposed to give avg folk a say. If you can't move large sums of money, you have NO representation. Why should folks have to pay for representation twice i.e. DC salary and contirbutions to PACs?? Lobbyists can write laws, you know anybody that's done that! They've even taken away folks votes in some areas by Gerrymandered districts!! The outcome is pretty much predecided!! Funny BOTH partys will not support reform, as it would take away their power. It's a shame. but true.
  • by Obama Snake Oil co Location: Washington on Aug 13, 2011 at 04:34 AM
    Some more hope and change we can believe in...of course our tax values will remain high without justification. I can just hear Obama now making a putt.."How do you like me now?"
    • reply
      by TyrrellCountyAngryCitizen on Aug 13, 2011 at 07:14 AM in reply to Obama Snake Oil co
      No doubt about that.Heck both of my homes taxes went up while everybody in the county government voted themselfs a raise and got it.These people in this county got to go.
    • reply
      by Anonymous on Aug 13, 2011 at 10:26 AM in reply to Obama Snake Oil co
      But there is justification, it is called inflation. The value of the dollar just keeps dropping. Why do you think, crude is at about 90 a barrel and prices are still up. Been to the grocery store recently, prices go up and up.
    • reply
      by Anonymous on Aug 13, 2011 at 12:02 PM in reply to Obama Snake Oil co
      I like him a lot better after seeing the Tea Party willing to shaft American just to make him look bad. SHAME on those liars, they said they were going to focus on jobs and repealing parts of the health care bill, but all they have done is act like a bunch of spoiled children. I won't fall for their mess again!
      • reply
        by Obama Snake Oil co on Aug 13, 2011 at 12:41 PM in reply to
        So lay the cards down there anonymous. I want to know those lies. I am aware of the Obama lies, however, WITN doesn't give me enough space to post all of them. Children? You mean those kids that want the rich taxed due to the fact they are entitled? Guess what, its over for you and the dems this coming year. Cry as you must, its over. People are so fed up with the democrats they will be luck to keep a seat in any house due to your denial of the problem. Tea Party? You mean the seasoned warriors that protest more government and high taxes with no spending. What planet are you on, Borg? Do you not see what has been going on? Is your 401K not in the dumps from hopey changey? The problems in this country are based on the fact that people like you vote without bothering to be informed of who you vote for. If you were, you realized how bad this country is doing right now. I guess you should be proud of the debt, unemployment, housing and the fact your choice is a loser that will not even protect other soils. So sleep well tonight knowing its your fault but don't tell you kids as they will be left to pay back that massive debt you OKd with you vote. You knew what was coming and you sold them out. Yeah, don't fall for this mess again. Shame on you for being a fool!
        • reply
          by Votes don't matter @ times on Aug 14, 2011 at 09:54 AM in reply to Obama Snake Oil co
          What if you lice in a Gerrymandered district? Isn't the outcomes in those districts pretty much predetiremoned? The answer is yes!! Elections are decided in the primaries these days!!! Election day are becoming more and more meaningless unfortuneately!!! BOTH partys are bought and paid for and there's NOBODY commenting on this page that truly make any difference in the real world. We continue with the status quo regardless who gets elected. I love the mantra "Free Trade", I'd love to see FAIR TRADE instead!!! Multinationals will never let that happen though! Buy some more tin foil!!
  • by Amy Location: Farmville on Aug 13, 2011 at 04:16 AM
    Things sure are better since Barrack Obama became President.
    • reply
      by seriously? on Aug 13, 2011 at 05:57 AM in reply to Amy
      I pray that you were being sarcastic with your comment, things have plunged downward since oBUMa became president.
      • reply
        by jj on Aug 13, 2011 at 08:13 AM in reply to seriously?
        Not at all, now the service members can serve together with homosexuals openly.
        • reply
          by Anonymous on Aug 13, 2011 at 08:32 AM in reply to jj
          is that your only example? if so, you are not thinking right. I don't care one way or another about gays serving, I just know that it's not a popular decision.
    • reply
      by Anonymous on Aug 13, 2011 at 10:23 AM in reply to Amy
      Yep, how is that hope and change working for everyone? I am loving my new forced diet of beans and rice. Would say bread, but that is to expensive.
  • by BLAH on Aug 13, 2011 at 03:35 AM
    Thank you democrats Frank and Dodd(frankendodd)for the collapse that Republican John Mccain said was going to happen back in 05.Mccain proposed a housing reform act that the democrats blocked.This reform would have more than likely saved this country from such a high unemployment rate.I also want to thank the backwardsman for spending trillions with absolutely nothing to show for but an unemployment rate that went well past 8%.OK,now I have to go weed out the garden then go bag some groceries then go flip a few burgers,then go shake $#! out of sheets come home sleep 5 hours and start all over again.Life cant get any better under this pinnochiobama imbecile.
    • reply
      by Mustang on Aug 13, 2011 at 06:05 AM in reply to BLAH
      It's funny how our President and the media seem to conveniently overlook this as they continue to blame Bush.
      • reply
        by Chuck WireWiggler on Aug 13, 2011 at 10:19 AM in reply to Mustang
        It's Bush's Fault, just in case you didn't know.... When Adam ate of the fruit in the garden, you can trace that also back to Bush's fault.
      • reply
        by Anonymous on Aug 13, 2011 at 10:22 AM in reply to Mustang
        They are all to blame.
      • reply
        by Common Sense on Aug 13, 2011 at 10:50 AM in reply to Mustang
        Yeah funny how they do that. Just like they blame John Wilkes Booth for shooting Lincoln, people frequently get blamed for things, especially when they are responsible for those things.
  • by cynthia Location: north carolina on Aug 13, 2011 at 02:43 AM
    How is the market in north carolina and what can my husband and i expect when selling hour home?
    • reply
      by Well on Aug 13, 2011 at 06:11 AM in reply to cynthia
      Well Cynthia, since there seems to be many homes on the market, it all depends on how low you are willing to price your home. While Greenville and surrounding areas are not as bad as other parts of the country, we still are seeing houses sit on the market longer. Good luck.
    • reply
      by Good luck on Aug 13, 2011 at 07:41 AM in reply to cynthia
      The fluidity of the housing market is in part determined by the ability to get a loan. Jumbo loans are very hard to get right now, so if you're selling for over 430K, forget it. If you need sell fast, check with some local banks and brokers and find out what the lending guidelines are now. Remember the median income levels around here, and price it so it qualifies for the most buyers.

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