It is no secret that the national housing market has gotten even worse this year. With each passing month, it seems that most measures pointed to further weakening. Although there are a few exceptions at the state and local level, the wave of foreclosures is still so large that most markets cannot stage price recoveries. And the portion of underwater home mortgages is now over a fifth of the entire home market. 24/7 Wall St. examined the nation’s metropolitan areas that had the biggest gains in home prices from January to October of this year and those that had the worst.

Home markets that continued to see steep price drops are generally those with higher-than-average foreclosure rates and, usually, higher-than-normal unemployment. Markets with price appreciation, on the other hand, are generally marked by below average unemployment rates and by home values that never fell a great deal during the recession. The reason prices held up relatively well during the recession is because housing prices peaked much later in those areas than the national peak in 2006, keeping demand relatively level.

Bloomington, Ind., is a prime example. Home values in the metropolitan statistical area did not peak until the second quarter of 2010, nearly three years after the national average. That means demand remained good through the recession. Since that peak, values have dropped only 3.7%. Compared to a national market where prices have dropped by nearly a third since 2006, this decline is nominal. Bloomington shares another characteristic with home markets that have done well. Its unemployment rate is only 7.3%, nearly two full points below the national average as of October.

A prime example at the other end of the market is the Reno-Sparks metro area. Home prices peaked early, in the first quarter of 2006. This is probably because of the Nevada building boom, which also hit neighboring Las Vegas-Paradise metro area. Home inventory was so large that the numbers of vacant homes grew rapidly, even before the recession officially began. Since their peak, home prices in Reno-Sparks have plummeted more than 51% by October, and they continue to fall to this day. There is not a strong employment base to support home prices and sales. Unemployment in the Reno area is 12.1%.

24/7 Wall St. relied on CoreLogic’s Home Price Index to identify the metropolitan statistical areas that increased and decreased the most from January to October of this year. CoreLogic also provided Foreclosure data for the 384 MSAs the company tracks. Data reflecting the amount each housing market is down from its peak value is from Fiserv-Case Shiller. Unemployment data for October of this year is from the Bureau of Labor Statistics.

24/7 Wall St. found, as it reviewed the housing markets in 384 U.S. metropolitan statistical areas, that those regions that survived the recession the best economically have begun to see a rebound in home prices. Markets marred by high unemployment and sharp drops in home prices have usually not recovered at all.

Biggest Price Index Increases

5. Monroe, Michigan
> Home value change January to October: +8.26%
> September foreclosure rate: 1.97%
> Unemployment rate: 8.1%
> Peak: 2005 Q3 (-29.8%)

Monroe county, where the city of Monroe is located, had one of the highest unemployment rates in the country at the beginning of this year, at 11.8%. In just 10 months, that rate dropped to 8.1%, a 31% difference. Monroe’s dramatic improvement in unemployment may have contributed to the growth in home prices. Over the first 10 months of the year, home prices have risen 8.26%, the fifth-highest rate in the country. This is a dramatic improvement from the severe decline in home values in the region since the housing bubble burst. From the third quarter of 2005, home prices had dropped more than 30%.

4. Jonesboro, Arkansas
> Home value change January to October: +8.65%
> September foreclosure rate: 1.14%
> Unemployment rate: 6.9%
> Peak: 2009 Q3 (-3.7%)

Jonesboro, Ark., has maintained a relatively stable housing market compared to the majority of the country. Home prices peaked in the third quarter of 2009, three and a half years after national prices peaked. Since that quarter, prices in Jonesboro have only dropped 3.7%, among the smallest decreases in the country. The metropolitan area also had an exceptionally low foreclosure rate, as of September 2011.

3. Bloomington, Indiana
> Home value change January to October: +11.82%
> September foreclosure rate: 2.17%
> Unemployment rate: 7.3%
> Peak: 2010 Q2 (-3.7%)

Home values in Bloomington increased 11.82% over the first 10 months of the year, the third biggest rise among the 384 metropolitan areas measured by CoreLogic. Bloomington’s home value profile does not match that of the average American city, most of which peaked in 2006 and declined at least 10% since. Bloomington’s highest home value was reached in the second quarter of 2010, and home prices fell only 3.7%. The stability of the region’s home values likely has allowed home prices to grow faster than the rest of the country.

2. Holland-Grand Haven, Michigan
> Home value change January to October: +11.89%
> September foreclosure rate: 1.17%
> Unemployment rate: 7%
> Peak: 2005 Q3 (-18.5%)

Home prices increased nearly 12% in the Holland-Grand Haven metropolitan area from January to October 2011. This was a long-due step in the right direction. Much like many Michigan cities, home prices in the region were among the earliest in the country to peak, hitting their highest point in the third quarter of 2005. Prices dropped 18.5% from that period and are only now starting to improve.

1. Charleston, West Virginia
> Home value change January to October: +17.95
> September foreclosure rate: 1.35%
> Unemployment rate: 6.8%
> Peak: 2009 Q2 (-1.7%)

Charleston’s home prices increased a full 17.95% between January and October 2011. This is easily the biggest home value increase across the 384 metropolitan statistical areas measured by CoreLogic. Charleston’s foreclosure rate in September 2011 was just 1.35%, putting it in the lowest quintile of foreclosure rates across all metro areas. Like Bloomington, Charleston is one of the rare housing markets that did not peak midway through the past decade. Home values in the region declined only 1.7% from their peak, which was halfway through 2009.

Biggest Price Index Decreases

5. Danville, Illinois
> Home value change January to October: -9%
> September foreclosure rate: 3.87%
> Unemployment rate: 10.8%
> Peak: 2007 Q3 (-8.0%)

Home prices in Danville, Ill., underwent a smaller-than-average decrease from their peak in the third quarter of 2007. Moreover, home prices increased slightly (1.5%) from the second quarter of 2010 through the second quarter of 2011. This was only a momentary improvement, though, as home values dropped 9% from January to October of this year.

4. Yuba, California
> Home value change January to October: -9.09%
> September foreclosure rate: 3.77%
> Unemployment rate: 16.7%
> Peak: 2005 Q4 (-51.1%)

Yuba, Calif., was one of the hardest-hit real estate markets in the country during the recession. From its peak in the second quarter of 2005, home values in the region plunged a stunning 51.1%, one of the 10 biggest declines in the country. In the first 10 months of the year, prices fell just over 9%. Unemployment in Yuba is 16.7%, the third-highest rate in the country. This is actually a substantial decline from the beginning of this year, when it had a rate of 21%.

3. Tucson, Arizona
> Home value change January to October: -9.36%
> September foreclosure rate: 2.35%
> Unemployment rate: 7.9%
> Peak: 2006 Q1 (-42.8%)

Tucson’s economy was hit harder than most areas in the country. This is also true for its housing market. The metropolitan area has had very high foreclosure rates. This, combined with what has been a weak job market in the area, caused home prices to drop 42.8% from their peak in the first quarter of 2006. Home prices are still falling, although at a much slower rate than in previous quarters. From January to October of this year, home values fell 9.36%.

2. Reno-Sparks, Nevada
> Home value change January to October: -9.77%
> September foreclosure rate: 4.92%
> Unemployment rate: 12.1%
> Peak: 2006 Q1 (-51.1%)

Since their peak in the first quarter of 2006 to the second quarter of 2011, home prices in the Reno-Sparks metropolitan area sank a jaw-dropping 51.1%. This is among the largest drops in the country. Home values in the region have yet to increase at all, however, their rate of decline has slowed down. Additionally, the metropolitan area had a foreclosure rate of nearly 5% as of September, among the highest rates in the country. The overall economy of the Reno-Sparks area is still in bad shape, with an unemployment rate of 13.3%, which is much higher than the national average.

1. Bloomington-Normal, Illinois
> Home value change January to October: -10.02%
> September foreclosure rate: 1.36%
> Unemployment rate: 7.3%
> Peak: 2008 Q1 (-0.9%)

Home values in the Bloomington-Normal metropolitan area have decreased more than those in any other area of the country from January to October 2011. Home prices in the metropolitan area did not peak until the first quarter of 2008. According to Fiserv-Case Shiller, home prices have declined just under 1% from their peak to the second quarter of 2011. From January to October of this year, however, they dropped a dramatic 10%.

Charles Stockdale, Michael B. Sauter and Douglas A. McIntyre

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