A small city in Louisiana and two tourism hubs are most at risk of falling home prices in the coming year, according to a forecast released last week by real estate data firm CoreLogic. Lake Charles, Las Vegas and Miami all could endure declining home prices, CoreLogic said.
The coronavirus has sparked a housing boom in much of the country. On the supply side of the housing equation, many homeowners decided not to sell this spring or summer, a trend that squeezed the number of homes for sale. As for demand, many white-collar workers kept their jobs – and realized that a house full of people working and schooling remotely was getting a bit cramped.
Inventory shortages and bidding wars in much of the nation.
Nationally, home prices rose 5.9% from August 2019 to August 2020, CoreLogic said.
Most at risk for falling home
While home prices have been rising despite high unemployment, CoreLogic said in the report released Tuesday these five areas have a “very high” risk of declining home values in the coming 12 months.
1. Lake Charles, La.: Many homeowners in Louisiana already were struggling before the pandemic, and the recession has tightened the squeeze. Louisiana’s mortgage delinquency rate was 10.71% in August, second highest in the nation, according to mortgage data firm Black Knight. Lake Charles was hit by Hurricane Laura in August.
2. Las Vegas: Sin City’s economy is all about casinos, conventions and concerts – all of which have been curtailed by the coronavirus. As casinos reopened, Nevada’s jobless rate fell sharply. After topping 28% in April, Nevada unemployment had fallen to 13.2% in August. Home prices could fall 6.5% in Las Vegas by August 2021, CoreLogic said.
3. Miami: Another tourism-dependent economy, Miami has welcomed far fewer visitors since March. What’s more, Miami-Dade County ranks No. 2 on Bankrate’s list of metro areas where home prices have outpaced wage growth by the widest margin over the past decade.
4. Springfield, Mass.: Massachusetts has one of the nation’s highest unemployment rates, and Springfield is well outside the high-wage, high-tech economy of Boston.
5. Modesto, Calif.: This is another market in which home prices have grown much faster than wages.
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