10 worst USA real-estate markets for 2009

[Marc]

1. Los Angeles
2008 median house price: $375,340
2009 projected change: -24.9%
2010 projected change: -5.1%

The median home price in the L.A.-Long Beach-Glendale metro area is projected to fall nearly 25% in 2009 - the biggest drop in the country.

2. Stockton, Calif.
2008 median house price: $248,050
2009 projected change: -24.7%
2010 projected change: -4.0%

3. Riverside, Calif.
2008 median house price: $256,540
2009 projected change: -23.3%
2010 projected change: -4.8%

4. Miami-Miami Beach
2008 median house price: $293,590
2009 projected change: -22.8%
2010 projected change: -6.4%

Miami will be nursing the hangover from its epic building boom for years to come. After falling 22% in 2008, prices are predicted to plunge another 23% next year.

5. Sacramento
2008 median house price: $225,140
2009 projected change: -22.2%
2010 projected change: 2.3%

6. Santa Ana-Anaheim
2008 median house price: $532,810
2009 projected change: -22.0%
2010 projected change: -3.5%

7. Fresno
2008 median house price: $257,170
2009 projected change: -21.6%
2010 projected change: -3.3%

8. San Diego
2008 median house price: $412,490
2009 projected change: -21.1%
2010 projected change: -2.9%

9. Bakersfield, Calif.
2008 median house price: $227,270
2009 projected change: -20.9%
2010 projected change: -2.5%

10. Washington, D.C.
2008 median house price: $343,160
2009 projected change: -19.9%
2010 projected change: -5.7%

Source...

Cheers

Marc

[mattnz]

Yes, I hear that California is essentially bankrupt. Their housing market has collapsed, and with the share market down their state pension funds aren't even close to covering state employee pensions which are extremely generous. Their state employee pension plan gives you 90% of your wage at retirement for life!! Its no wonder they are having problems meeting these commitments now.

[muppet]

Yep, more people leaving California than moving to it.

[mattnz]

Its interesting to think that California and USA are essentially in the same position, much greater liabilities than they can possibly cover. The only difference is that the country controls the money printing presses. Pretty scary really.

[Marc]

Whats even more interesting is opinion stating the US dollar will "crash" next year.. see video here.

Cheers

Marc

[mattnz]

Yes the likes of Buffett have been predicting it for years prior to the current crisis.

[Greg Cook]

10 Worst USA real-estate markets for 2009

We may be on the verge of bankruptcy but there is tremendous opportunity. The median sales price in Riverside County is now down to $220,000 but more than 65% of First Time Homebuyers qualify for the median price home.
We went through a similar "bankruptcy" in the 90's with people across the nation spreading the "gloom and doom" about California. When the national economy turned, so did ours and you saw the kind of appreciation we experienced in the late 90's and early this century.
To quote our most famous politician: "We'll be back!"

[Marc]

Hello Greg,

Welcome to PT!

Are there any good investment hot spots in California that you can recommend?

Cheers

Marc

[Greg Cook]

California Hot Spots

All of California is a hot spot if you buy right. If you are thinking residential I would focus on areas that are affordable for First Time Homebuyers. There is no move-up market because almost all homeowners are upside down.
California is also governed by the "tides". The closer you are to the ocean the more upside you will have.
I read an article on Sunday that indicated there is a booming market for developed residential lots. Investors are buying up lots that have been developed by homebuilders and holding them in speculation of the market turning.
Residential short sales are a underused investment tool. Most buyers are focusing on the foreclosed homes and as a result there is often a bidding war.
Hope this helps.

[Stevegoodey]

Hi Greg,

Thanks for sharing.

Can you recommend any real estate agents websites that you use?

Or any reliable commentry sites?

Thanks again.

[mattnz]

I have just been comparing this list with the one compiled by demographia for 2008.
http://www.demographia.com/dhi.pdf

It makes interesting reading and confirms my concerns for nz and aus in the next few years.

Median Income Multiples for US cities on this list

1. Los Angeles 11.5
2. Stockton 6.4
3. Riverside 7.1
4. Miami 7.1
5. Sacramento 5.8
6. Santa Ana - Anaheim unknown
7. Fresno 6.1
8. San Diego 10
9. Bakersfield 5.1
10. Washington DC 5.5

Demographia rates any city over 5.0 as severely unaffordable. It is interesting to note that at least 9 of the 10 fall into that category. Many markets in USA however are amongst the most affordable anywhere in the OECD.

So NZ and Aus markets are rated as:
Auckland 6.9
Christchurch 6.6
Wellington 6.1

Sydney 8.6
Melbourne 7.3
Brisbane 6.4

All of these markets are clearly grossly over-priced and just like their US and UK counterparts must drop to affordable levels in time. Especially when you consider that mortgage interest rates are consistently higher in NZ and Australia than in these countries that have already experienced significant drops and are expected to have more.

[Greg Cook]

10 worst USA real-estate markets for 2009

Interesting numbers. I'm not sure how they arrived at the ratio but the last time we went through this (the 90's) I came across what I thought was a very realistic way of looking at values.
It's called the "equilibrium housing value". In a nutshell when the median family income can qualify for a loan at the median sales price we would be in balance. If the median sales price was higher than the income could qualify it was "speculation" and if it was lower there was room for growth.
From a lender's perspective this makes sense. Lending standard have become more realistic so they are a good barometer of affordability. The exotic loan programs are gone, so buyers have to qualify for fixed interest rate amortizing loans. We won't be looking at loan induced foreclosures but back to thosethat are the result of "normal" economic events (i.e. loss of job, divorce, death etc.)
The median sales price in Riverside County is down to $220,000, and if the glut of foreclosure and pre-foreclosure properties hits in 2009 (as predicted) we will probably see more softening.
I would be interested to know how demographia arrived at their numbers.

USA Real Estate

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In 2008, Real estate down in USA, it effects in below cities only

Median Income Multiples for US cities on this list

1. Los Angeles 11.5
2. Stockton 6.4
3. Riverside 7.1
4. Miami 7.1
5. Sacramento 5.8
6. Santa Ana - Anaheim unknown
7. Fresno 6.1
8. San Diego 10
9. Bakersfield 5.1
10. Washington DC 5.5

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[ChrisEdwards]

Well in 2009 the US and global economy were going through recession so may be that's why markets performed that bad. What is the current status of these markets.