Cheaper Homes Lost More Value Than Expensive Ones

While homeowners of all types have seen the values of their houses decline in the half-decade since the market peaked, a new report indicates that homes in the bottom quarter of the market have lost more value proportionately than those in the top tier. Real Estate Economy Watch reported on December 21, 2011, that an analysis by California-based investment bank Clear Capital found that lower priced homes experienced declines of 45 percent on average while higher priced homes lost only 25 percent of their value since the crash. The overall national average was 39 percent.

“The lower end was first to go in terms of values and the top tier held out longer,” Alex Villacorta, director of research and analytics for Clear Capital, told Economy Watch. While higher priced homes, however, did lose more real value dollar wise, the average decline was $120,000 compared to an average of $60,000 lost in lower priced homes.

According to Economy Watch, the gap between price tiers shrinks when markets have reached a mid-point equilibrium between fair market and real estate owned (REO) values. The number of homeowners needing foreclosure help depresses the market and a surge in REO activity makes the gaps between price tiers grow larger.

Economy Watch reported that Clear Capital will release more data and a forecast in a year-end report this month, but what do you think this means for home prices in Maryland? Considering that the foreclosure rate in the state went up in November, do you believe that the disparity between lost value will continue to widen in Maryland?

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