Home values are dropping at an accelerated rate, according to a new quarterly survey conducted by the Wall Street Journal, which is leaving homeowners and sellers strapped with underwater mortgages and an inability to sell. According to the survey, prices declined in almost all of the 28 major metropolitan areas in the fourth quarter of 2010 when compared to a year prior.
Home Values Dropped In Most Metro Areas
The WSJ report found that year-to-year price declines were greater in all but three markets than previous quarters. Some cities affected most by these declines include Miami, Orlando, Atlanta and Chicago, the latter being a city that was once considered safe from housing market issues.
Areas that have not yet seen drops include Portland and Seattle, Ore.
The report found that the falling housing prices reflect a couple of problems in the market:
- Weak demand: Many homeowners are feeling highly uncomfortable about taking on a mortgage loan when they’re unsure of whether they’re going to be employed during the entire term of their loan.
- Tight credit conditions: Lenders are still cautious when it comes to dishing out cash to borrowers. As a result, they have held on to stringent credit criteria.
Since buyers just don’t want to deal with a lot of additional debt and lending is still strict, homes are remaining empty. These unfortunate circumstances result in significant home value drops.
Homeowners and Sellers Suffer the Most
The deteriorating market is tough on just about everyone, but it has the greatest impact on homeowners and those who would like to sell.
Unsold homes are accumulating everywhere from New York’s Long Island where enough homes had piled up to last 15 months at the end of December to Charlotte, N.C. where the unsold home inventory sat at 14 months.
Seeing that a balanced inventory would only last six months, those who want to sell will find it nearly impossible and those who would like to hold on to their homes but see values dropping are in grave danger of falling underwater if they haven’t already.
Foreclosures are already expected to bypass the record numbers seen in 2010, which means, as some have already predicted, the market won’t recover.
The only hope for housing is that jobs will improve enough for buyers to take advantage of the low-priced homes along with more loan modifications to help people avoid losing their homes. Without some drastic changes, the housing market could be in trouble for years or decades to come.