5 Worst Housing Markets for 2013
BOSTON (TheStreet) — The U.S. housing sector has apparently turned a corner — but some big cities shouldn’t expect much of a price rebound this year, a 2013 forecast from market tracker Zillow (Z) says.
“Housing markets have different performances from each other because the fundamental drivers of home prices vary from market to market,” Zillow Chief Economist Stan Humphries says. “Phoenix looks quite different from Detroit.”
Zillow, a popular website that estimates property values for virtually every home in America, predicts median U.S. prices will rise 3.3% this year after bottoming out in 2011. (The site estimates median values rose 5.9% in 2012.)
Zillow, though, also expects 19 major metro areas — from Boston in the Northeast to Las Vegas in the Southwest — to see either price declines or below-average increases this year.
Ironically, Humphries says many cities Zillow predicts will see substandard gains can blame the fact that their markets didn’t fall as much during the housing bust as others did — leaving less room for rebounds. “These were not the nation’s hardest-hit markets,” the expert says.
But Humphries also attributes many cities’ below-average forecasts to the fact that they’re in “judicial-foreclosure” states, where banks must go through lengthy court proceedings to seize homes. He says that puts a damper on price gains because buyers in such locales know there’s a backlog of distressed properties that will eventually hit the market. “People are very likely to either be in distress themselves or know someone who is, and that colors their perception of the market,” Humphries says. Here’s a look at the five cities Zillow predicts will have the worst price appreciation this year among America’s 30 largest metro areas (excluding Houston, which doesn’t make enough property information public to allow for analysis). Zillow compiled its forecasts by looking at local market conditions, job growth and other factors. (Click here for a look at the site’s predictions for 2013’s five best markets.)
Forecasts refer to median property-value gains for all houses and condos in a given market, whether they’re put up for sale in 2013 or not. Estimates of current median values are as Dec. 31, the latest date with figures available.