The poor get poorer

Posted by: Peter Coy on April 2, 2008

Isn’t it always the way? In most parts of the country, folks at the bottom are seeing the biggest declines in home prices, according to a new analysis by Zillow.com. People with more expensive homes are faring a little better. The pattern is particularly obvious in California.

Here are some examples of how prices in the bottom fifth and the top fifth of homes in various markets have done over the past year.

Los Angeles
bottom -14.2%
top -4.1%

Sacramento
bottom -29%
top -13.5%

San Diego
bottom -20.1%
top -5.1%

(continued)

San Francisco
bottom -19.6%
top +2.8%

San Jose
bottom -8.3%
top +11.6%

Boston
bottom -11.5%
top -4.7%

New York
bottom -5%
top -4.1%

Washington
bottom -7.1%
top +2.4%

Miami
bottom -19.6%
top -14.8%

There are a few important exceptions to the pattern, where the houses at the top lost more value:

Chicago
bottom -2.2%
top -8.3%

Orlando
bottom -11.3%
top -11.7%

Phoenix
bottom -12.2%
top -13.7%

Ironically, for the country as a whole, the top has done worse than the bottom:

U.S.
bottom -0.7%
top -7.5%

But that statistic is misleading. It reflects the fact that the housing bubble was most inflated in expensive states like California, and least problematic in cheap states like Texas.

For more data, click here and then click on home value bands.

Reader Comments

Guy

April 2, 2008 11:20 PM

Peter,

I'm not sure these statistics are necessarily accurate to the "the poor get poorer" cliche. While it may be true so far, it's a bit premature imo..

The reasoning is that rich people (or people that have more disposable income/more money saved), will likely have the extra income to pay the higher premium for a more expensive place. The poor of course are the first to feel the effects of a recession, as many live paycheck to paycheck, and thus housing will have to fall first for those folks. Give it some time, and I think the top fifth of areas will reflect the bottom fifth.

Go4MoreCommission

April 6, 2008 5:18 AM

its location, location, locations. Now is time to buy real estate, price won't go lower, be a millionaire instead of a renter, do it before it is too late, the market won't stay this low forever, interest rate at at its lowest, the National Association of Realtors says this real estate is just a temporary slump, there is no better time to buy real estate because prices won't decline below this bottom, best choices are now before it's to late, invest in your future, you owe it to yourself to be the next future millionaire Trump

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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