America's New Housing Crisis Capitals By Francesca Levy Forbes 01-29-2010

America's New Housing Crisis Capitals
Real-time listing prices in these areas are dropping, and experts expect them to fall further this year.
By Francesca Levy
Forbes
January 29, 2010

During the housing bust, while the effects of foreclosures and a crushing recession tore through real estate markets in states like Florida, California and Nevada, the Denver metro seemed insulated from economic harm. It has consistently performed relatively well among the 20 major metropolitan housing markets tracked in the S&P/Case-Shiller Home Price Index, which measures sale prices, and is published with a two-month lag. In its January report, covering the year ending in November, Denver topped those markets with a 0.5% home price increase.

But real-time asking price data provided to Forbes by Altos Research, a Mountain View, Calif.-based real estate research firm, suggest the Mile-High city is taking a turn for the worse. In July 2009 listings showed a .5% decline from the year before, the first time the city posted a price tag decline since 2008. The slump has since worsened; in January year-over-year asking prices were down 3%, to $368,870.

Denver is not alone. In eight other areas, current housing trends show similar sustained year-over-year slumps. Altos' data allows its researchers to forecast trends in the coming year, and near-term prices in these spots are expected to continue to drop. They're not all places you might expect. Some, like Charlotte, N.C., and San Francisco, Calif., we last week identified as a smart place to think about buying since, according to our measures, buying for the long-term there had become attractive.

On others, economists looking at long-term price estimates have been bullish. During the housing boom, Dallas benefited from a relative lack of price inflation and speculation, and thus took less of a hit during the bust. Home values were roughly flat in 2005 through 2007 and stayed above the national average even after it peaked, as opposed to bubble cities like Las Vegas, where home values rose to 21% above the national average in late 2006 and are now below it by 31%, according to data from Zillow.com.

But in August, according to Altos, for the first time list prices in Dallas showed a 0.5% decrease from the same month the previous year. They have continued to drop moderately and in January were 1.2% lower than a year earlier, or $237,720. Austin is experiencing similar price declines. Price tags began to fall in November by 2.5%, and this month prices were down 4.25% from the previous year, to $289,216. Modest dips, to be sure, but ones worth noting in cities with housing markets thought to be relatively healthy.