There is another region where the worst may be to come: New York City-area metros. Housing values in Newark, N.J., could fall 26%.
Likewise, Edison, N.J., is also among the mid-sized metro areas expected to see the steepest drops this year. But the worst could be over by the end of 2009 for New York’s satellite cities.
Manhattan, now at the epicenter of the financial crisis, is noticeably absent from the top 25 weakest markets list. So far, the city has been isolated from the popping bubbles in the rest of the country.
Property prices were rising in Manhattan until early last year. Zandi believes Manhattan could be spared a steep drop. He expects a fall of around 20%. Even if big bankers lose their bonuses, “Manhattan is still supported by international demand,” he says.
That prediction may prove conservative. The value of new contracts signed have already dipped 15% to 20% in the fourth quarter, according to a Beige Book report from the U.S. Federal Reserve last month.
The report said much of the activity came from “desperate sellers,” so it may not be a fair gauge of where prices will go from here.
Of course, that depends on how many more sellers become desperate.
Keep in mind that Newark and Edison aren’t references to those towns, but the metropolitan divisions of the same name:
Newark-Union Metropolitan Division
Edison-New Brunswick Metropolitan Division