Looking at home price graphs on zillow it really is impressive how they fall into one of the categories. First, there are areas whose home prices have fallen to pre-bubble levels, then there are those which are still fighting the fall.
First, a few which have lost all bubble gains:
These cities all had a huge bubble, then prices returned to what they were before the bubble and stayed there.
Then there is a second group of cities which has held on to gains, at least so far. They seem to be following the same trajectory as the rest of the country. They just aren't dropping as fast.
I am willing to bet that the crash in home prices in the entire rest of the country will suck people out of many of these areas until the prices reach what they were a decade ago. Incomes haven't gone up enough to explain these prices, or at least they have not in Southern California. It mostly seems like wealthier people just refusing to sell.
What does stand out is that these are all places known for being actually interesting places to live. Bubble prices in places like Merced went away pretty quickly. At the end of the day, few people wanted to spend a fortune to own a home there. In New York City, even the thought of crashing home prices was not enough to keep people away. I am not convinced any are actually much more interesting places than a decade ago though. So I expect most to see a slow draining down of prices until inflation adjusted they get near previous values.
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I read somewhere that in some areas houses are being offered for sale at $1. I live in Sydney Australia, where an old, broken down, dirty old house ion a bad area with no transport goes for over $500 000
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