Cities With The Fastest-Falling Home Prices

For our list of cities with the fastest-falling home prices, we used Altos Research's January market update, which looks at asking prices, inventory and days on the market single-family homes--but not condominiums--in 27 of the country's closely watched real estate markets. It uses homes for sale in each city's Metropolitan Statistical Area--a census-defined area that the federal government uses to collect statistics--for its data.

Miami is the only city of the 27 markets Altos tracks that saw asking prices rise over the last three months. Prices there were up 2% from October to a median price of $494,992. The reasons for this are mixed: While the numbers are somewhat promising, Miami's good fortune is also a reflection of just how long it took for the hard-hit Florida housing market to regain its footing. And even with the recent upturn, it's the city where homes sit on the market for the longest by far. Homes here stay for sale for a median of eight months. Not to mention Altos' analysis only reflects single-family homes--not condominiums, a section of the Miami's real estate market that has yet to stabilize.

Therefore, Miami's upswing should be taken skeptically, says Simonsen. "Miami lagged behind everything else, and so is only now starting to feel the impact of the stimulus."

But a decision on Jan. 7 by mortgage entities Fannie Mae ( FNM - news - people ) and Freddie Mac ( FRE - news - people ) to begin backing some Miami condominium loans that they previously hadn't touched might help rejuvenate sales.

Big Apple Trouble
Most markets have seen price drops of less than 3%, and that's true for New York City, where home prices have fallen by 2.3%, to a median of $638,082. But there may be trouble in store for the Big Apple, which peaked late and whose real estate market was more directly affected by the Wall Street implosion of late 2008. Its inventory of listed homes has increased by 4.2% since October. Phoenix is the only other market that saw inventory rates rise during a seasonally slow season in which it typically falls. Slimming down inventory is necessary to curb price declines.

In New York, onerous real estate laws mean that foreclosures take roughly six months to complete, and post-foreclosure sales don't usually close for another four months after that. This has kept buyers away, and hamstrung real estate recovery in the area.

"In states with complex foreclosure laws, the recovery is clearly being delayed," says Simonsen. "For example, there are investment funds that will buy in Texas and California, but won't buy in New York because it takes so long to foreclose--and then you have to go to court."

New York prices likely have much farther to fall.

Although the rate of decline has mellowed from stomach-turning to gentle nationwide, these numbers show that any jubilation over a recovered real estate market would be premature.

Charlotte, N.C., the city with third-greatest drop in asking prices (falling 4.4% to a median price of $248,543 in December), suffered from exuberant pricing early in the year. But the Wall Street collapse hit Charlotte hard, as it's a financial hub that is headquarters to Bank of America Corp. ( BAC - news - people ), among other major banking institutions. Now the area's housing market is suffering.

"In Charlotte, at the beginning of the year, new sellers thought they would get a nice premium, and they were pricing above the median price," says Scott Sambucci, vice president of data analytics at Altos Research. "They were reading all those articles about the national housing market saying, 'That's not happening here.' But there was a lag effect."

Source: http://www.forbes.com/2010/01/18/falling-home-prices-lifestyle-real-estate-foreclosures.html?boxes=Homepagechannels