Continuing Variations In Market Conditions
While few markets throughout the country have been able to survive current market conditions without scars of battle, there remain some markets which have had much milder experiences than others. Detroit and Cleveland are currently two of the country's worst markets; however, they are not alone in their free-fall market trends.
Markets currently experiencing the highest foreclosures are undoubtedly the most risky. Slow employment rates and increased job losses have contributed greatly to the current real estate problems. There are also significant problems being faced by markets where property inventory is rapidly increasing. Rapidly increasing property values are also proving to create major stumbling blocks in many markets.
These markets typically experienced two to three-fold increases in property values during the real estate boom. However, the end of the boom brought a decline in these markets which has not yet hit rock bottom. With the high rate of adjustable mortgages, these markets have found themselves facing even greater difficulties.
As prices continued to increase rapidly during the real estate boom, it was common for buyers to take advantage of lower interest rates provided by adjustable rate mortgages so as to make home payments more affordable. In areas where there was a struggle for first-time buyers to afford the high housing prices, this became a very common phenomenon.
Many people were prompted to make a mad rush of housing purchases by the incredibly low interest rates at the time. Unfortunately, however, a significant number of these buyers had less than sterling credit ratings. Common mortgage loans at that time included sub prime, adjustable rate mortgages. The demise of the market saw a proportional increase in interest rates such that homeowners today are now unable to continue making their mortgage payments. This has resulted in an increased rate of foreclosures in markets that experienced overnight doubling and tripling of housing values.
The crisis has been even further fueled by the economic conditions in a number of areas. As the rate of layoffs continue to increase, the volume of properties on the market as well as those being foreclosed have also begun to increase.
Jacksonville, Cleveland, Phoenix, Miami, Tampa, Las Vegas, Riverside-San Bernardino, Riverside, Detroit, New Orleans and Sacramento are currently the eleven worst real estate markets in the entire country.
Sacramento has experienced a dramatic decline in property values far outweighing the national average. Similar to other markets, Sacramento has also been found to have fallen victim to the fast paced real estate market and its subsequently plummeting prices. Median property prices in Sacramento today have somehow managed to remain well above other markets, despite its worsening conditions. Considering the high volume of properties now flooding the market, this is certainly not good news.
Despite Sacramento's current circumstances, it is currently far from being the worst case. Detroit holds that title very strongly with its market prices falling by more than 7%. Detroit's main problem lies in the significant number of layoffs coming out of the auto industry. Cleveland does not maintain much better circumstances and has, in fact, seen median property prices falling by at least 7% while inventory continues to increase.
Though these markets do not seem likely to recover any time within the near future, certain other markets do exist which are currently showing signs of significant improvement. Seattle, for example, has median property prices that have increased by almost 9% during the past year. San Francisco is close behind with an increase greater than 7% in that same time period. San Jose, California as well as Charlotte and Raleigh in North Carolina are other examples of markets on the mend.