California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

The real estate market for housing has been depressed, but according to a new analysis
by the online publication 24/7 Wall Street, it may get worse for some cities. 

According to the analysis by 24/7 Wall Street, the ten markets on the list of "Housing
Markets That Will Collapse This Year," and like those that have already collapsed (see
Housing Part 1) may not see a full recovery in home prices for years. The analysis
identifies that the inventories in these markets tend to be large. Demand tends to be
low as the unemployed cannot be buyers. Finally, the fear of further price drops is
exacerbating the problem in trying to reverse the downward trend. 

The methodology used in the analysis included data from the Fiserv Case-Shiller Index. 
The selection process identified those that are forecasted to have the largest percent
price drop between the first quarter of 2011 to the first quarter of 2012.

The following are the predicted 10 Housing Markets That will Collapse This Year.
California cities are highlighted illustrating the numbers and narrative used in
presenting the analysis.

HOUSING MARKETS THAT WILL COLLAPSE THIS YEAR

1. Naples, Florida

2. Riverside-San Bernardino, California
Expected price drop: -15.6%
Median family income: $59,700 (190th highest)
Unemployment rate: 13.7%
Median home price: $181,000 (70th highest)
Projected to hit lowest level: Q1 2012

Like so many industrial cities in California, Riverside-San Bernardino is being
affected by the recession and housing crisis more than most other parts of the U.S.
Unemployment has hit 13.7%, home vacancy and rental vacancy rates are high, and
home values are plummeting. Median home prices are down more than 55% from their
peak in 2006. By the beginning of next year, prices are expected to drop an
additional 15.6%, or nearly $30,000.

3. Las Vegas, Nevada

4. Detroit, Michigan

5. Merced, California
Expected price drop: -13.2%
Median family income: $42,900 (8th lowest)
Unemployment rate: 18.6%
Median home price: $112,000 (38th lowest)
Projected to hit lowest level: Q2 2012

The median family income is just $42,900, placing it among the ten poorest major
cities in the country. In 2008, the city's property lost 46.1% of its value. This
was the second-greatest depreciation in home value for a city since at least 1980.
The city's median home prices are expected to drop an additional 13.2% by the
beginning of next year.

6. Miami, Florida

7. El Centro, California
Expected price drop: -12.1%
Median family income: $43,300 (10th lowest)
Unemployment rate: 28.6%
Median home price: $130,000 (70th lowest)
Projected to hit lowest level: Q1 2012

The median income is just $43,300 per family; the tenth-lowest in the U.S.
Unemployment is at a staggering 28.6%. Between 2006 and 2011, home prices
decreased by more than 50%. According to a report in the Imperial Valley Press,
one home was sold in the El Centro area before the recession for $390,000. In
2009, that same home was listed at $200,000. Prices are expected to drop an
additional 12.1% by the first quarter of 2012.

8. Salinas, California
Expected price drop: -11.8%
Median family income: $62,100 (145th highest)
Unemployment rate: 12.8%
Median home price: $240,000 (34th highest)
Projected to hit lowest level: Q2 2012

Since 2006, the median value of the 125,000 houses there decreased in value by
more than 61%. This is the fourth biggest decline from peak home value among
all major American cities. More than 40% of this drop occurred in 2009, the
year after the housing bubble burst. Unemployment in the city is at 12.8%, well
above the national average of 9.2%. Several companies in the area, including
a food processing company expect to continue to lay off workers in the coming
months, which should serve to further depress home values.

9. Bethesda, Maryland

10.  Fort Lauderdale, Florida

I am Tim Johnson and this has been the California Business Minute.