Daily Real Estate News | June 7, 2011 | Share
Which Housing Values Have Suffered the Most?
Lower priced homes have been harder hit than higher priced homes in the sluggish housing market, according to a study by Harvard University’s Joint Center for Housing Studies.
High-priced homes have lost 38 percent of their value since values peaked in 2006. Lower priced homes, on the other hand, have dropped 63 percent since peaking in 2007.
Why such a difference? Daniel McCue, senior research analyst for the Joint Center, says it’s because lower priced homes appreciated much more before reaching its peak and therefore had further to drop than higher priced homes.
For example, in San Francisco, lower end homes nearly tripled in price before peaking. High-end homes, meanwhile, did not even double before reaching its peak. McCue attributes this partially to lenders making more loans available to lower income households during the housing peak days, which increased demand and prices.
Foreclosures have also plagued low-income areas, more so than higher income areas, according to the study. Foreclosures in low-income neighborhoods are more than double that of high-income neighborhoods, according to the Joint Center for Housing Studies.
Prices range drastically among major housing market so what’s considered “high-priced” and “low-priced” in the study varies greatly from market to market. For example, in Atlanta low-tier homes were considered under $122,533 and high-tier homes above $221,679; in San Francisco, low-tier homes were considered $312,546 and high-tier homes over $573,577.
Source: “Falling Prices Whacked Low-Priced Homes Hardest,” USA Today (June 5, 2011)
