Who’s lost the most?
Data from the Federal Reserve showed that real estate values continue to fall. They fell over $600 billion dollars in just the third quarter of 2010. N.C. State University economist Mike Walden says that low value homes are losing the most.
“We are now in the fourth year of decline in real estate values, and in fact economists think in 2011 that will continue. But people do want to know, well, what kinds of homes are declining in value the most. And here what we are going to talk about is homes categorized by their value: high-value homes, low-value home. And the data actually show … it’s been the lowest value homes that (have) lost the most in percentage terms.
“In fact, over the last three years, the lowest value homes have lost between 25 and 50 percent of their value — much more than the highest-value homes.
“But part of the reason … is because during the real-estate boom, which went roughly from 1997 to 2007, it was the lowest-valued homes which increased the most in value. So they have risen the most, but they have fallen the most also.
“And this is the reality of the market. And of course what that means for people living in those lower-valued homes — many of whom are lower-income people — they are actually suffering the most in terms of this pull back in real estate.”Category: Economic Perspective