Best Cities for Trapped Homeowners
Some cities are better than others for trapped homeowners seeking sales.
Dec. 14, 2008— -- By 2006, it was clear the Phoenix real estate bubble had burst. That's when both tract homes in the exurbs of Maricopa County and high-end condos in Paradise Valley began falling into foreclosure. And as prices dropped, homeowners panicked and unloaded their properties.
Yet those who jumped back in during 2007 badly mistimed the bottom. Phoenix prices are down 20 percent this year, according to the National Association of Realtors (NAR). The result? That second wave of speculation has resulted in scads of newly trapped homeowners.
"The same speculators that were partly responsible for the housing bubble and its subsequent popping are the same ones that are trying to replicate the 2003 [through] 2006 period," says Anthony Sanders, a professor of finance at Arizona State University. "As the housing market seeks a bottom, speculators and some well-funded hedge funds are jumping in the market but finding that the bottom hasn't been hit yet. Hence, they jump back out again."
This type of scenario is playing out nationwide. Homeowners selling their properties after less than a year now represent 17.3 percent of total sales in the U.S., reports Zillow.com. This is higher than at any point during the housing boom, back when many people were avidly flipping homes for profit.
But some cities are better than others for trapped homeowners seeking sales. Las Vegas and Yuba City, Ariz., are leading the way for these sellers who mistimed the bottom. Respectively, 34.1 percent and 34 percent of these homeowners sold their homes in the third quarter of 2008, despite having owned the homes for less than a year.
Even though those homes might be sold at a loss, sellers should take heart they're not in Florida, where it's almost impossible to find a buyer. Based on transaction volume over the last year, Sunshine State markets like Orlando, Miami and Tampa rank lowest nationally, according to Radar Logic, a New York-based research firm.
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