Real Estate Depreciation — the Lowest of Lows in the U.S.
By: Diane Tuman, Content Manager | May 27, 2008
Recently, I wrote a blog post about areas in the U.S. where 2008 Q1 home values actually appreciated from 2007’s Q1 home values. This, unfortunately, is the counter post and it ain’t pretty.
Guess which area was the biggest loser? If you guessed California, you’re right. But, if you nailed it with a guess of Merced, CA, you’ve really been paying attention. According to our Q1 Home Value Report, the city of Merced, which is located smack dab in central California — about two hours from the Pacific Coast and two hours to Yosemite — dropped in value by 34 percent YoY in Q1 . Thirty-four percent! Even the second “help link” on the home page for the City of Merced Web site lists a link “I want to… avoid foreclosure” with the lead sentence stating, “Merced has one of the highest foreclosure rates in the nation. It’s estimated that one out of every 82 homeowners in Merced is having problems paying the mortgage.” Actually, it’s one in 66 households, according to a CNN article, but obviously, the city has a vested interest in making sure it citizens get the help they need in order to prevent a dwindling tax base, the West Nile Virus
As a matter of fact, the top six MSAs with the worst depreciation year-over-year in Q1 are all in California: Merced, Stockton, Modesto, Salinas, Riverside-San Bernadino-Ontario, and Madera. Vegas is the first non-California MSA that makes this depressing list. To add insult to injury, Vallejo, CA recently declared bankruptcy due to falling tax revenues, rising payroll expenses, and a bad housing market. As a matter of fact, out of the 160 MSAs we cover in this report, 129 have lost value. Here’s the top 10 list of biggest losers for Q1, YoY:
| Region | Zindex | YoY Change |
|---|---|---|
| Merced, CA | $187,500 | -34.0% |
| Stockton, CA | $244,000 | -33.5% |
| Modesto, CA | $222,500 | -30.1% |
| Salinas, CA | $454,000 | -27.7% |
| Riverside-San Bernardino-Ontario, CA | $287,500 | -26.0% |
| Madera, CA | $212,500 | -25.5% |
| Las Vegas-Paradise, NV | $215,500 | -25.2% |
| Vero Beach, FL | $159,500 | -24.9% |
| Punta Gorda, FL | $139,000 | -24.9% |
| Vallejo-Fairfield, CA | $336,500 | -24.4% |
In looking at the 5-year annualized change, Merced did not have any growth, meaning its value is right back to where it started five years ago. However, in looking at the 10-year annualized change, Merced is still ahead in value, holding a 7.2% home value gain since 1998. Whew. Of the top 10 MSAs that lost value, the MSA of Riverside-San Bernardino-Ontario appears to be the most promising since its held strong to its 5-year annualized value of 5.8% and its 10-year annualized value of 10.2%.
Now for the really bad news. In looking at depreciation over a 10-year time period, MSAs that have been flat or moved downward continue to be ones that are recognizable for hardships suffered during the demise of the auto industry or other manufactured goods in Michigan or Ohio:
| Region | Zindex | YoY Change | 5-yr | 10-yr |
|---|---|---|---|---|
| Jackson, MI | $101,500 | -18.8% | -3.8% | 1.5% |
| Detroit-Warren-Livonia, MI | $148,000 | -15.9% | -4.5% | 0.4% |
| Flint, MI | $77,000 | -12.9% | -2.8% | 0.1% |
| Muskegon-Norton Shores, MI | $78,500 | -11.2% | -1.7% | 1.4% |
| Toledo, OH | $99,500 | -10.4% | -1.5% | 1.8% |
| Grand Rapids-Wyoming, MI | $123,500 | -8.3% | -0.9% | 2.2% |
| Dayton, OH | $108,000 | -3.1% | 0.6% | 2.0% |
| Cleveland-Elyria-Mentor, OH | $124,000 | -7.7% | -1.5% | 1.7% |
| Springfield, OH | $94,500 | -4.1% | -0.1% | 2.0% |
| Canton-Massillon, OH | $110,500 | -3.4% | 0.2% | 1.9% |
- Stumble it!
- Categories: Real Estate, Real Estate Analytics, Zillow
Comments
9 Comments so far
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Mark McGlothlin on May 28, 2008 8:53 am
Diane, in reference to the last paragraph of your thoughtful post above - many of the markets that are hurting these days have “self inflicted wounds”. These self inflicted wounds come in the form of very high taxation (see WSJ article on Michigan’s taxation issues today) and less than friendly business climates. It’s makes for a thoughtful contrast with Texas for example, who has very healthy housing for the most part, no state income tax, and is attracting businesses right and left due to a business friendly climate.
Chuck on May 28, 2008 1:17 pm
For some reason I get kicked out every time I try to access the Quarterly report (and I was able to access it a couple of weeks ago). Does anyone know why this might be happening? Are we not supposed to be able to view it? Is it just me? Any feedback is appreciated. Thanks.
Realestator on May 28, 2008 4:40 pm
As an investor, it’s hard to make money in Texas with the extremely high property taxes. Kills the cash flow. Call me crazy though - I still like Merced. It’s got a great university there that is poised to grow considerably over the next 20 years (or so they say). Could be some good opportunities there in the next couple of years - I’ll be keeping my eye on it to see how or if it recovers.
Diane Tuman on May 29, 2008 10:24 am
Chuck: It looks like there is a bug in viewing the report, if you’re using IE. We are working on correcting it. But it seems to work fine using Firefox. Sorry about the inconvenience…
Patsy Blake on May 29, 2008 11:17 am
We hear alot about areas that are failing, lets get some stats on areas that are growing and surviving and making money and real etate is selling. There’s just not enough of that info being put out there. I’m ready for some up beat info and I know it’s happening. Ex. my cousin live in Hobbs NM and he says they can’t built fast enough. that hole in the wall town is bringing in business, thereby the housing market is good. I say let’s push the goverment to spend some of that money on refurbishing our infrastruture and put people to work that need REAL ESTATE. Create jobs like they did to bring this country out of a depression like they did the last one. We also need more railroads-let’s bring that back to life - what better way to move our goods then by rail. I’m done spouting off -everyone have a great day.
You Say Tomato, I Say Mortgage Tomato | Zillow® Blog on May 30, 2008 5:17 am
[…] Patsy Blake: We hear alot about areas that are failing, lets get some sta… […]
Lisa buchanan on June 29, 2008 6:09 pm
Why isn’t Miami on the list of worst depreciation in the country? The media constantly emphasizes the huge hit Miami is taking.
Diane Tuman on June 30, 2008 10:00 am
Oh, Miami is suffering, too. Miami shows an 18.8% loss year-over-year according to our Q1 Home Value Report. It’s just not as severe as Merced’s 34% loss. http://www.zillow.com/quarterlies/QuarterlyReports.htm
Eugenio Rodriguez on August 24, 2008 11:28 am
According to the Miami-Dade Dept. of Property Appraisal, my home market value in Little Havana has GONE UP from $405,361 to $429,419!!!! Therefore, despite the new $50,000 exemption, my property tax has gone down only a few dollars 2009, that is, to $4,851.
What can a retired property owner do in the face of such outrage?! I couldn’t sell my house now for more than $325,000 —if I’m lucky to find a buyer.
I’d appreciate your input.