Housing Bust Hits Lower-Priced Homes Hardest
June 9, 2011
The housing bust has been kinder to higher-priced homes than to lower-priced ones, says USA Today.
- Nationwide, top-tier homes have lost 38 percent of their value since prices peaked in 2006.
- By contrast, prices for bottom-tier homes have dropped 63 percent since peaking in 2007, says real estate website Zillow.com.
The disparity is consistent across larger cities, according to a study on the state of the U.S. housing by the Joint Center for Housing Studies of Harvard University.
- In Atlanta, for instance, prices of high-end homes fell 23 percent from their 2007 peak to December 2010.
- But low-end Atlanta homes fell 50 percent, the study says.
- In San Francisco, the most-expensive homes dropped 24 percent from their peak vs. 54 percent for the least-expensive ones.
In many cities, lower-priced homes appreciated more before they peaked, so they've fallen further, too, says Daniel McCue, senior research analyst for the Joint Center.
- In San Francisco, for instance, low-end homes almost tripled in price before peaking, while high-end homes didn't even double before they peaked.
- Before the housing crash, lenders made loans more available to lower-income households, which stoked demand and prices for the less-expensive homes, McCue says.
- Also, higher-income homeowners tend to have more resources to ride out a recession.
Source: Julie Schmit, "Falling Prices Whacked Low-Priced Homes Hardest," USA Today, June 5, 2011. "The State of the Nation's Housing, 2011," Joint Center for Housing Studies, June 2011.
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