Lake Erie's swoosh of falling values begins in Michigan, where prices fell in all three of the state's big metro areas: Grand Rapids (down 3 percent in one year), Lansing-East Lansing (down 5.4 percent), and Detroit-Warren-Livonia (down 7.1 percent). The swoosh continues into Ohio, through Toledo and Cleveland, before tailing off in Youngstown.
Prices also fell in the Ohio cities of Cincinnati, Columbus and Dayton.
"That is simply the continued economic deterioration of the old industrial Ohio, Michigan and Pennsylvania," says Anthony Sanders, professor of finance and real estate at Arizona State University. He recently moved from Columbus, where he was a professor at Ohio State.
- Home Prices Fall in 1/3 of the Nation
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- Study: Home Values Fall
The National Association of Realtors' study has shown a steady decline in home values.
See how your home fared in the second quarter of 2007.
Michigan, Ohio and parts of Pennsylvania "never recovered from the United States transitioning from a manufacturing center to a service center," Sanders says. He could add Indiana to that list, too.
As people move away from the swoosh, the supply of houses exceeds demand. In addition, the subprime mortgage meltdown hit Detroit and northern Ohio hard, resulting in thousands of foreclosures. All of these factors depress house prices. Of Ohio's seven biggest metro areas, only Akron escaped the carnage; prices there went up 1.5 percent year over year. And Lake Erie's shoreline had one bright spot: Buffalo, N.Y., which is at the other end of the lake from Toledo and Detroit, saw a strong price increase of 6.7 percent.
Outside of Michigan and Ohio, other metro areas with large price declines include South Bend-Mishiwaka, Ind. (down 7 percent); New Orleans (down 6.7 percent); Newark, N.J. (down 6.4 percent); Sacramento (down 6.3 percent); Reno-Sparks, Nev. (down 6.2 percent); Hartford, Conn. (down 5.4 percent), and Barnstable Town, Mass. (down 5.4 percent).
Most metro areas in Florida lost value or stayed about the same. Exceptions were Miami-Fort Lauderdale (up 2 percent) and Tallahassee (up 3.5 percent). Both metro areas saw year-over-year price increases, but in both places, prices fell in the second quarter compared to the first quarter.
Builders Gone Wild?
In most of Florida -- and in parts of California and Arizona, and in Las Vegas -- "what we're witnessing is too much supply, rather than a demand issue," Sanders says. "These are areas where we have builders gone wild. They put in too much supply."
Like drunken 21-year-olds in a wet T-shirt contest during spring break, home builders in those areas knew they were exposing themselves and they would suffer a hangover, but they couldn't help it. They were mesmerized by skyrocketing house prices during the first five years of this century. Many newly built houses stand vacant, and that depresses the value of existing homes that are for sale.
"Just as we know that trees don't grow to the sky, we know that home values can't go up that fast forever," says Jim Baird, chief investment strategist for Plante & Moran Financial Advisors.
That's something to keep in mind for residents of the nine cities that saw double-digit year-over-year increases in median prices.
 |
Biggest Winners |
|
|
| Metro Area |
2006
Q2
($000s)
|
2007
Q2
($000s)
|
%
Change |
| Salt
Lake City, Utah |
191.2 |
233.1 |
+21.9 |
| Binghamton,
N.Y. |
92.8 |
111.2 |
+19.8 |
| Salem,
Ore. |
195.3 |
227.9 |
+16.7 |
| Farmington,
N.M. |
177.1 |
201.9 |
+14.0 |
| Allentown-Bethlehem-Easton,
Pa.-N.J. |
243.4 |
274.5 |
+12.8 |
|
Salt Lake City was a beehive of housing activity, with an increase of 21.9 percent in one year, to $233,100 from $191,200. It's not a recent phenomenon: The median price in Salt Lake City was 37.2 percent higher than it was in the second quarter of 2005.
Other metro areas with double-digit increases were Binghamton, N.Y. (19.8 percent in one year); Salem, Ore. (up 16.7 percent); Farmington, N.M. (up 14 percent); Allentown-Bethlehem-Easton, Pa. and N.J. (up 12.8 percent); Beaumont-Port Arthur, Texas (up 11.8 percent); Reading, Pa. (up 11.2 percent); Glens Falls, N.Y. (up 10.7 percent), and Spokane (up 10.4 percent).
Median prices went up in the biggest metro areas: New York (6.3 percent), Los Angeles (2.9 percent), Chicago (1.7 percent), Dallas-Fort Worth (1.7 percent), Philadelphia (3.4 percent), Houston (1.4 percent), Miami-Fort Lauderdale (2 percent), the District of Columbia (0.3 percent), and Atlanta (0.9 percent). Those are the nine biggest metropolitan statistical areas; Detroit ranks 10th.
How did home values fare in your area?
See our state-by-state map.
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