NCPA - National Center for Policy Analysis

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.

For text:

http://www.usatoday.com/money/economy/housing/2011-06-06-high-price-homes_n.htm

 

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