The housing market has been in a serious slump since the Great Recession of 2008. Many homeowners have found themselves owing far more on their homes than the actual value. This has led to a major drop in the net worth of some homeowners. While some areas of the country have seen their housing prices decline gradually, some areas have seen the value of their homes fall off a cliff. Let's take a look at the five worst housing markets in the United States.

TUTORIALS: Economic Indicators

Nevada leads the nation when it comes to homes that are underwater with six out of 10 homeowners finding themselves upside down on their mortgages. This is much higher than the national average of 22.5% according to data and analytics company CoreLogic, but lower than the 68% total in 2010. Nevada homeowners saw their homes run up more than the national average during the real estate boom, and have seen them fall just as fast during the bust. Home prices are down 59.4% in a state where the median income is $53,341. The average loan to value in the state is a whopping 115% according to "LendingTree Weekly Mortgage Rate Pulse Reports" released on August 30, which is well above the national average of 70%.

Arizona residents saw their property values decline 51.7% from the market peak. This has left 49% of Arizona borrowers in the red on their mortgages. The average loan to value has risen to 93.6%. The average Arizona homeowner has a negative equity value of $60,000 which is quite high considering that the median income is $48,745. Despite the large amount of mortgage owners that are underwater, some analysts believe that the market is bottoming. The 49% of homeowners underwater is lower than the 51% that were underwater a few months ago. (Read Avoid Foreclosure: How To Handle An Underwater Mortgage.)

It may seem that with a median income of $44,736 and a number of attractive properties in the state that Florida homeowners would have survived the crisis in tact. That is not the case as a 50.2% drop in home prices and a 12% unemployment rate have combined to place a large number of Florida homeowners owing far more than their homes are worth. Forty five percent of Florida residents find themselves underwater on their mortgages because of the housing market crash. A rise in foreclosures in the Florida region has driven prices down at a much higher rate than the national average.

The state of Michigan has been hampered by a seasonally adjusted unemployment rate that is around 11% and a decline in home prices of nearly 34%. Residents in the state have been hurt by an exodus of a large number of jobs leaving a lot of homeowners unable to pay their mortgages. Michigan has 33% of its homeowners with a negative equity ownership percentage. The average loan to value for residents comes in at 84.2% which is in the high range. The median household income of $45,413 according to the 2010 American Community Survey has not been enough to make up for the crash in home prices.

TUTORIAL: Market Crashes

Everything is not sunny in the state of California, as the state comes in dead last in terms of housing markets. In a state that (according to the "2010 American Community Survey" three-year average) has a median household income of $56,418, California leads the nation with the largest number of underwater homes. More than 2 million homeowners in the state have negative equity in their homes with 34.6% of all borrowers having negative equity. Home prices in the state are down 45.2% from their peak levels. The 70.1% average loan to value ratio is slightly above the national average.

The Bottom Line
As you can see, the fall of housing prices has affected real-estate markets all across the country with some areas seeing such large declines that it may take a decade or more for them to recover.

Related Articles
  1. Retirement

    The 5 Best Retirement Communities in Fort Myers, Florida

    Discover why Fort Myers, Florida has become a popular retirement destination, and learn about five of the best retirement communities located in the city.
  2. Entrepreneurship

    Taxes in Florida for Small Businesses: The Basics

    Learn why Florida's tax laws make it an attractive place to start a small business, and understand the types of taxes a small business owner must pay there.
  3. Economics

    The 6 Industries Driving Florida's Economy

    Learn how tourism, agriculture, international trade, aerospace and aviation, and the life sciences industries drive Florida's economy.
  4. Investing

    Citi Borrowers' Home Equity Payments Poised to Rise

    Defaults could rise as Citigroup home equity borrowers who had been paying interest only are about to see monthly payments increase an average of 165%.
  5. Home & Auto

    6 Neighborhood Red Flags

    There are some qualities you can’t discover about a neighborhood until after you’ve moved in. But there are ways to scout out red flags ahead of time.
  6. Home & Auto

    5 Luxurious Ways to Boost Your Home's Resale Value

    Not all renovations are created equal. Here are five that are most likely to make a property appreciate (and be appreciated by househunters).
  7. Mutual Funds & ETFs

    Top 3 Muni California Mutual Funds

    Discover analyses of the top three California municipal bond mutual funds, and learn about their characteristics, historical performance and suitability.
  8. Retirement

    The Cities Where the Ultra-Rich Retire in Florida

    Understand why the Florida communities of Miami Beach, Palm Beach and Key West serve as magnets for the ultra-rich retirees who descend on the state.
  9. Retirement

    The 5 Best Retirement Communities in Sarasota, Florida

    Discover five of the most popular retirement communities in the Sarasota/Bradenton area of Florida, and why retirees are choosing that area for retirement.
  10. Home & Auto

    The Most Expensive Neighborhoods in Manhattan

    Understand why Manhattan has some of the priciest residential real estate in the world. Learn about the top four most expensive neighborhoods in Manhattan.
  1. How do I calculate how much home equity I have?

    Even though it is normally assumed most people know their home equity, many are still confused about the topic. It is an ... Read Full Answer >>
  2. What are the typical requirements to qualify for closed end credit?

    Typical requirements for a consumer to qualify for closed-end credit include satisfactory income level and credit history, ... Read Full Answer >>
  3. What are some examples of financial markets and their roles?

    Some examples of financial markets and their roles include the stock market, the bond market and the real estate market. ... Read Full Answer >>
  4. What price-to-book ratio is considered average in the chemicals sector?

    You can use Microsoft Excel to calculate the loan-to-value ratio if you have the mortgage amount and appraised value of a ... Read Full Answer >>
  5. How does the loan-to-value ratio affect my mortgage payments?

    Several factors affect the mortgage rate you can obtain when you purchase a home. Lenders analyze credit histories and scores ... Read Full Answer >>
  6. What is the difference between a PMI (primary mortgage insurance) loan and a Federal ...

    Home buyers who are unable to contribute a traditional down payment of 20% may think home ownership is out of reach. However, ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!