NEW YORK (24/7 Wall St./MarketWatch) — Since the peak in early 2006, the median price of a U.S. home is down by a third. And though the market has begun to show signs of having bottomed, prices are still down nationally by 1.9% from last year and are expected to fall an additional 1% from the beginning of this year through 2013.
ReutersJuly unemployment in the worst housing markets was above the national rate.Of the 384 largest housing markets measured by real-estate data company Fiserv, 69 have seen home prices fall more than the national average. 24/7 Wall St. reviewed the markets with the worst home-price declines from their pre-recession peak. Of those metro areas, we identified the markets where the median price did not improve in any of the periods measured by Fiserv as of the first quarter of 2012. The 10 worst are housing markets that have fallen at least 55% and have yet to recover.See full report at 24/7 Wall St.While the drop in home prices in these markets has slowed, the local economies have been devastated. July unemployment rates in the worst housing markets were all above the national rate of 8.1%. Eight of the 10 have rates of at least 10%, and five are above 12%. Merced, Calif., one of the 10 worst-off cities, had an unemployment rate of 17.8% in July, the fourth-highest in the country.ECONOMY AND POLITICS
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• Follow @MKTWEconomicsAccording Fiserv chief economist David Stiff, the unemployment rates and languishing home prices in these markets are indicative of the underlying problems in these states as a whole. “The reason the job markets are so weak in these metro areas is that during the boom more than half of the growth was generated either directly or indirectly by residential real estate, and so now the reverse has happened,” Stiff explained.Further evidence of the economic troubles heaped on these cities, three of the housing markets — the California municipalities of San Bernardino, Vallejo and Stockton — have filed for bankruptcy since the recession began. Stockton’s Chapter 9 filing represents the largest such case in U.S. history.Continually depressed home prices also have led to unusually high foreclosure rates in these markets. According to foreclosure data from RealtyTrac, a site that tracks housing data, these cities had among the worst foreclosure rates in the country as of the second quarter of 2012. Of the 10 cities, eight are among the 20 with the highest foreclosure rates out of the 212 metro regions with populations of 200,000 or more.Of the cities with the worst home-price declines, some have begun to recover. In the Detroit metro area, which did not make the list, the median home price has declined by 55.8% from the first quarter of 2006. However, between the first quarter of 2011 and the first quarter of 2012, the median price went up by 8.6%, one of the largest increases in the country.Like Detroit, many of the 10 worst-off markets appear to be about to recover because buyers see bargains. Home prices in seven of the 10 metro areas were lower than the national median of $159,000. Fiserv projects that of the 10 housing markets on our list, five will increase by more than the national rate of 5% between the first quarter of 2013 and the first quarter of 2014. This includes the Deltona-Daytona Beach-Ormond Beach region, which Fiserv projects will have more than 10% growth in median home value in that time. Stiff confirmed this: “investors, who were part of the problem back in the boom years will be trying to jump into these markets at a low.”
ReutersEven with home prices down nearly 56% since the 2006 benchmark, Detroit did not make this list.24/7 Wall St. reviewed data from Fiserv to determine the 10 metropolitan areas that had no annual improvement in their housing markets from the first quarter of 2007, the first quarter of 2009 and the first quarter of 2011, all through the first quarter of 2012. We relied on RealtyTrac for data on foreclosure rates and foreclosure sales (both for second quarter of 2012). We also obtained seasonally adjusted unemployment rates for July from the Bureau of Labor StatisticsOn the following pages are the 10 towns that cannot turn around.
THIS STORY HAS 111 COMMENTSRead them & join the conversationMORE NEWS INPersonal FinanceBillabong Bidder Drops Out Leaving A$694 Million Sale to TPG
Billabong International Ltd. (BBG) said a second bidder withdrew from the sale process forAustralia’s largest surfwear company, leaving TPG International LLC’s A$694 million ($726 million) offer as the only one on the table.TPG, which is examining Billabong’s financial data, offered A$1.45 a share and the other bidder had shown interest in an acquisition at about the same price, the Gold Coast, Australia- based company said in a statement without naming the other party. The second bidder was Boston-based Bain Capital LLC, people familiar with the matter said Sept. 6.Enlarge image
Billabong has become a target for buyout groups following a 38 percent fall in its share price in the past year as it cut earnings and sold new stock to reduce debt. Photographer: Ian Waldie/BloombergBillabong has become a target for buyout groups following a slump in its share price as it cut earnings and sold new stock to reduce debt. Last month, the company posted a A$276 million net loss, its first since listing in 2000, and wrote off 42 percent of the value of its namesake label as a consumer slowdown forced it to sell inventory at a loss and close stores.The withdrawal of the competing bid is “not a good sign,” said Tony Wilson, an analyst at Evans & Partners in Melbourne with a sell rating on the stock. “You always want a bit of bidding tension. The board may have to settle for A$1.45 if that’s what TPG want to pay,” he said.Billabong shares slumped 8.3 percent to A$1.33 as of 11:19 a.m. in Sydney, headed for the biggest decline since July 9.While the formal sale process with TPG continues, “there is no guarantee that, following this formal process, a transaction will be agreed or that the board will recommend any proposal,” Billabong said in its statement today.Previous Bidhttp://www.bloomberg.com/news/2012-09-20/billabong-bidder-drops-out-leaving-a-694-million-sale-to-tpg-1-.htmlWells Fargo, Morgan Stanley Faulted on RMBS Servicing
A law firm that won an $8.5 billion settlement from Bank of America Corp. (BAC) tied to faulty mortgage bonds said Wells Fargo & Co. (WFC) and Morgan Stanley (MS) failed to service $73 billion of similar securities, creating a default.Gibbs & Bruns LLP cited at least $15 billion of Wells Fargo’s residential mortgage-backed securities and $5 billion from Morgan Stanley where holders have 25 percent or 50 percent or more of the voting rights, according to a statement today from the Houston-based law firm. The dispute also covers $23 billion of Morgan Stanley-issued RMBS and $30 billion of Wells Fargo’s RMBS where holders “have significant voting rights, but less than 25 percent or 50 percent,” the firm said.Enlarge image
Gibbs & Bruns LLP said in January it was seeking information on pools securing more than $19 billion of residential mortgage-backed securities issued by affiliates of Wells Fargo, which says it’s the biggest U.S. home mortgage lender and servicer. Photographer: Scott Eells/BloombergFaulty mortgages and foreclosures have cost the largest U.S. home lenders at least $84 billion since the start of 2007, according to data compiled by Bloomberg, and have been blamed by regulators for discouraging banks from making new loans. Kathy Patrick, a partner at Gibbs & Bruns, led a bondholder group that reached a settlement in June 2011 with Bank of America covering mortgage trusts with an original loan balance of $424 billion.“We will review any communication we receive and respond appropriately,” said Mary Eshet, a spokeswoman for San Francisco-based Wells Fargo. Mary Claire Delaney, a spokeswoman for New York-based Morgan Stanley, declined to comment.
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