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 Tuesday by real estate data firm CoreLogic. Lake Charles, Las Vegas and Miami all could endure declining home prices, CoreLogic says.
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.
The result? Inventory shortages and bidding wars in much of the nation. Nationally, home prices rose 5.9% from August 2019 to August 2020, CoreLogic says.
5 markets most at risk for falling home prices
While home prices have been rising in spite of high unemployment, CoreLogic says 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 says.
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 where home prices have grown much faster than wages.
