Cities Where Home Prices Are Falling Dangerously

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The housing bust came late to Boise, ID.  While home prices in other cities around the U.S. began their drastic descent in 2007, Bosie�s home prices didn�t start feeling a price pinch until the end of 2008. Housing in Idaho�s capital wasn�t hit particularly hard by the subprime mortgage crisis, but it certainly was affected by the economic downturn. High unemployment and a wave of job loss-related foreclosures have caused home prices in the City of Trees and its surrounding suburbs to plunge.

This year alone Boise homes suffered a drastic 13.4% loss in value.  Next year won�t offer relief either, with prices projected to slip another 2.5%.   These drops landed Idaho�s capital city on our watch list of Cities Where Home Prices Are Falling Dangerously.

�Prices in Boise Proper specifically haven�t come down quite as much as people expect but in other areas around the city, prices have come down as much as 50% from where they were a few years ago,� says Cristina Pescaru, a Realtor with Gold Key Real Estate in Boise. �I think we absolutely haven�t seen the bottom of the market here.�

The folks at Local Market Monitor, a Cary, NC-based real estate research company, compiled a list of the cities that suffered relatively big home price hits this year with more projected through the next 12 months. LMM sifted through market data for more than 300 Metropolitan Statistical Areas (MSAs) and Metropolitan Divisions (MSADs), as defined by the U.S. Office of Management and Budget.  The company, which releases quarterly housing market reports, crunched home prices from October 2010 through September 2011 and calculated price projections through September of next year. For its projections, LMM took into account job growth and unemployment rates, population growth, sales and rental prices, and something called �Equilibrium Home Price,� which is a gauge of where the average home price should realistically lie based on economic data versus where it actually is.

Gallery: 13 Cities Where Home Prices Are Falling Dangerously

Every one of the 13 markets that made our list suffers from a glut of foreclosures. �Foreclosures are continuing to weigh down home prices in hard-hit foreclosure markets as the average sales prices of foreclosure-related sales drop,� explains Daren Blomquist of RealtyTrac, an Irvine, CA-based foreclosure listing site. Cities that made our list like Arizona�s Phoenix and California�s hard-up hubs Stockton, Fresno and Bakersfield also rank among RealtyTrac�s top 20 metro foreclosure rates.  Fifty percent or more of all completed home sales this year in these cities were distressed (either preforeclosure or bank-owned) � a factor that pulls the prices of non-distressed homes both in terms of appraisals and home seller efforts to compete for buyers.