Eight States Running Out of Homebuyers?

An article on the Yahoo Finance page, attributed to 24/7 Wall St., has identified 8 states where buyers may have gone on "strike", and coupled with the high foreclosure rate, has caused home prices to plummet.


Using previously released studies and data from sources such as RealtyTrac and the S & P Case-Schiller Index, the authors reiterate claims that home prices will drop another 7%-10% this year and that it may take another four to five years for the housing market to recover.

The eight states listed, in reverse order are:

8. Florida - with a vacancy rate of over 21% and the 3rd worst 2010 Foreclosure Rate

7. Oregon - 10.6% unemployment and more than a 74% reduction in building permits from 2006 - 2010.

6. Georgia - 6th worst state in 2010 for foreclosures and a 10% unemployment

5. Illinois - 1.23% population growth, 5th worst for decrease in building permits

4. California - 4th worst foreclosure rate and tied for 2nd worst unemployment rate

3. Arizona - 2nd worst state for foreclosures and 5th worst for vacancy rate (17+%)

2. Nevada - worst in the nation for foreclosure rate, unemployment and decrease in building permits

And the worst state according to this article? Michigan - my state.

A 15+% vacancy rate, 12.4% unemployment rate and the biggest population 'loser' from 2005-2010 at -2.05%, we know how the travails of the automotive sector have impacted all of us. Many are optimistic that new leadership in Detroit, by Mayor Dave Bing, and our new Governor, Rick Snyder, will start to propel us out of this mess and make some progress.

Of course, the controversial auto bailouts of GM and Chrysler didn't hurt and for now those companies appear to be gaining strength. Ford Motor Company remained in a stronger position and if anything has made even more progress in the last two years. I doubt that we'll ever revisit the years of massive manufacturing production that once were, but Detroit and Michigan are trying to reinvent themselves.

The article suggests that there are buyers waiting for even lower prices and that we may never again see the home prices of 2006, even after recovery. In areas with very high unemployment rates, the inventory of available homes may be too large to be supported. I don't necessarily agree with the 'buyer strike' terminology, although I have heard some potential buyers say they were going to save more money and wait for prices to drop even more before purchasing. It does not bode well for sellers that do not have a good amount of equity in their homes, that's for sure.

A fascinating snapshot, complete with data sources, and an easy read.