California almost steals the list of top 10 worst markets

U.S. home prices marked nine straight months of depreciation, according to just-released October statistics from First American CoreLogic, for a 10.4% decline from October 2007.

But the headline for Californians: The state is home to nine of the 10 of the worst performing markets.

Statistical area	State	% Change
Salinas	CA	-29.06%
Merced	CA	-28.97%
Stockton	CA	-28.86%
Riverside-San Bernardino-Ontario	CA	-28.79%
Vallejo-Fairfield	CA	-28.65%
Oakland-Fremont-Hayward	CA	-28.55%
Modesto	CA	-28.41%
Bakersfield	CA	-28.01%
Miami-Miami Beach-Kendall	FL	-27.34%
Sacramento-Arden-Arcade-Roseville	CA	-26.95%

No surprise here for the Golden State. Note that these statistics don't match up with those reported by MDA DataQuick, for example, because this outfit looks at repeat sales transactions. Also note the lag time here. They're looking at October still and we already have the November figures from MDA DataQuick. Remarkably, some statistical areas actually saw gains for the same period. The top 10:

Statistical Area	State	% Change
Binghamton	NY	8.93%
Sheboygan	WI	8.91%
Florence-Muscle Shoals	AL	7.63%
Victoria	TX	7.25%
Sherman-Denison	TX	7.06%
Plattsburgh	NY	6.94%
Rocky Mount	NC	6.80%
College Station-Bryan	TX	6.71%
Charleston	WV	6.38%
Shawnee	OK	6.31%

California was the decline leader, down 28.3% annually; Nevada dropped 25.4%, Arizona 20.1% and Florida 17.8%. The only states showing what the number crunchers considered "meaningful price increases" were West Virginia, up 5.9%; South Dakota, 2.9%; and Texas, 2.7%.

Makes me wonder if prices dropped first in some areas and others will follow.

-- Lauren Beale

Thoughts? Comments?

Comments

[MyLessThanPrimeBeef]

Lauren, why should we 'steal' what is rightfully ours?

And nine out of the top ten? Not even the underaged Chinese female gymnasts could accomplish that.

[Dave]

Prices significantly drop in Texas? I don't think so, for several reasons.

First, the tax policy in California (Prop 13) encourages people to buy ("get in early and have your property taxes capped at that price) much like the operation of the Greater Fool Theory encourages reckless stock investment, Buying in early when property values are increasing is the only way to lock yourself in for low taxes. Conversely in Texas, taxes are oppresive but voluntary. We don't have a state income tax. One third of my house payment is property tax impound. This puts extreme downward pressure on prices. Basically, in Texas we've never had runaway house prices and we never will. House prices here will always be on the floor. That's where they are now in Texas. You can't fall off the floor. I've seen some posts to earlier articles about people being taxed to death in California, but California doesn't have a monopoly on taxing people to death, and California doesn't do it through property taxes the way Texas does.

There's a joke here in Texas that if you want to go bankrupt paying taxes, just buy a $200,000 suburban house, If you want to live tax free, buy a 1000 acre ranch and one cow (because ranch land is taxed at a much lower rate; there's a reason people like to be ranchers in Texas).

Second, Texas is not the international hub that California is. This has unfortunate consequences in a downturn. Central Place Theory holds that regional hubs are connected to national hubs, which are connected to international hubs. See http://en.wikipedia.org/wiki/Central_place_theory. Economists studying Asian marketing heirarchies 80 years ago noted that in times of econdomic hardship, people migrated out of national hubs to regional hubs and out of regional hubs to local hubs. In good times, no place can make money like an international hub like California, but an international hub like California isn't the place to be in an economic downturn. During bad times, people can survive much more easily in regional hubs like Texas.

[firesale]

When San Marino is in the toilet, we'll finally be on the
CA bottom. Break a neck, San Marino. God speed.

[Mina Sirkin]

Prop. 13 isn't the main contributor to the housing problem. Most elderly people who are on Prop. 13 could not afford today's property taxes based on current values. While this law sometimes favors those who can afford it, it has allowed lots of elderly the luxury of being able to stay in their homes at a time when their income has decreased. This is good for society and helps people live longer.

The sources of the housing problem were bad underwriting and over appraisals. If the banks were more careful in underwriting those loans and followed the 1/3 rule on the income/debt ratio, we would not have this mess.

Mina N. Sirkin
http://www.SirkinLaw.com

[Suziclue]

I guess timing on when they do the survey is everything. Or California would be in all of it. Cities like Riverside and others in that are have plummeted. See recent trends here:

http://www.homepricetrend.com

[BottomFisher]

We're #1....We're #1... We're #1.......did I forget to say We're # 1?

[Rich]

"Makes me wonder if prices dropped first in some areas and others will follow."

The fact of the matter, as some of us who are your out-of-state readers have tried to report to your disbelieving regulars, is that not every market got bubbled over the last 5 years. Many of us live in places where housing prices have not gotten out of hand in relation to local median incomes. It was odd to watch HGTV 3 years ago and see what looked like ordinary California working couples with ordinary jobs talking about buying houses for $400k-$700k while those of us living in other states and working at the same types of jobs could not afford anything near that (but could still buy homes we could afford). One could only shake ones' head and ask how they do it? Why don't they go broke trying to service those mortgages? Well, it turns out, you do go broke when you borrow what you can't afford. We're sorry it happened to you, but it isn't happening to all your fellow countrymen and women. Use your dream affordable price as a search on Zillow or Realtor.com without limiting to zip code and see what you can get for the money in other places right this minute...