Falling Home Prices: New Housing Nightmare

April 1, 2009— -- No American city is immune from the housing crisis, with real estate values falling from coast to coast.

Today, the average price of a home in 20 major U.S. cities is 19 percent lower than it was just a year ago.

But not all places are hit equally. New developments in cities such as Las Vegas, Los Angeles, Miami, Phoenix and San Francisco have plunged further than older homes in other cities.

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For instance, home prices have dropped 32.5 percent in Las Vegas in the last year. But in the Boston area, prices have only fallen 7.3 percent, according to the Standard & Poor's Case-Shiller home index.

Tampa prices are down 23.3 percent, while in Cleveland, they have only fallen 5.2 percent.

Stephanie Graves knows that pain all too well.

In October 2005, she bought a house in a new development for $850,000 in Irvine, Calif., outside Los Angeles, with an $85,000 down payment. In January 2007, the house was appraised at $940,000 and she refinanced. Today, she still owes $846,000 on the house.

Graves has worked in the mortgage business for 18 years. But about a year ago business started to dry up. Now she can no longer afford the $6,500-a-month mortgage. She owes more than her house is worth and is going through a bank short sale.

Her house was initially listed for $800,000. She got an offer for $750,000 but then an identical home down the block sold for $710,000. The bidders came back and offered $700,000. She now hopes to sell it for $710,000 and will rent an apartment for $1,800 to $2,300 a month.

Things have become so bad in her neighborhood that Graves has now gone into business helping homeowners facilitate short sales. She is even working out the short sale of her sister's condo.

"I come to tears once a week," Graves said of the work.