Modestly Priced Homes Hardest Hit in Downturn

Cambridge, MA, June 6, 2011 -- Modestly priced homes took a harder hit than upscale homes during the downturn, according to a report from Harvard University’s Joint Center for Housing Studies.

Houses priced at the low end of housing markets typically fell about three times more than those at the upper end in the last year, according to the Center’s annual report, “The State of the Nation’s Housing.”

High-end homes are those with original sales prices in the most expensive one-third of all homes in a market; low-end homes are those in the bottom third.

Unlike in previous booms and busts, home prices at the lower end of the market rose at a quicker rate this time around. People in these homes likely had fewer resources to weather the storm as they lost their jobs and had other financial problems.

Housing values are now back to levels seen in early 2003, according to CoreLogic.

Approximately 30.7% of homes that sold in 2010 went for less than their purchase price, up from 25.4% in 2009, according to Zillow.

In addition, household formation is still weak as more young adults living with their parents for longer.

There's little urgency in the housing market because interest rates are still low and prices are continuing to drop.