2009 Best & Worst Housing Real Estate Markets

Let’s start with the good news: Historically, housing prices don’t drop consecutively for more than a few years. In cases where they do drop more than a few years, the reduction rate is very little. With the current credit crisis and a record 19 million vacant homes in the country, there is no shortage of houses to buy if you have the money, although I recommend waiting out until mid- July. Experts predict another 25% drop in prices by the end of 2009. If you’re looking for a house, these upcoming months could be the best time. Here is a graph of the change in average US home prices:

As with all good news, there is always some bad news. In this scenario, the bad news heavily outweighs the good news. Several of the once booming housing markets, such as the Inland Empire in Los Angeles, Las Vegas, and Phoenix, have seen the worst drops in prices.  Detroit, home of the automobile Big Three, is probably going to never recover from the losses this decade as thousands of jobs have been lost and houses are selling for next to nothing (a 0-16 football team probably didn’t help either). Prices are plummeting nationwide, there is no money to fill in the vacancies, and more homes are being foreclosed every day. We could be in for a hellish two years. This list attempts to quantify the specifics of the housing market in larger metropolitan areas in the US by ranking the biggest drops in house prices (worst areas) and the best areas (least drops/ increases)

Best Areas: Montana, South Dakota, and Missouri, states which really didn’t participate in America’s subprime mortgage blunder, all registered positive growth in the last quarter (Montana leading with an exrapolated annual increase of 3.1%)

Worst Areas: It’s no one surprise that Detroit is the worst area to buy a house right now. With the future of thousands of workers on thin ice and the largest employers in the city teetering on the brink of an economic tsunami, it would be foolish to buy a house here. The Inland Empire, Central Valley, and Southern California round out the top list due to a frenzy of foreclosures and artificial inflation. Houses in my area (Los Angeles) that were about 300,000 in 2003 skyrocketed to near 700,000 before the crisis and are now hovering around the 460,000 mark. Las Vegas and Phoenix also crashed after a decade of steadily increasing home values.