Housing outlook 2013. Image by NapaneeGal via flickr.com

While many markets are slowly but surely shrugging off the recession, several are still facing a rocky road ahead and it may be some time before we see a return to ‘normality’. So without any further ado, here’s RealtyBizNews’ lowdown on the worst housing markets to watch out for in 2013:

Detroit, Michigan

Sorry, no prizes for guessing who’s in the sorriest state – Detroit remains by far and away the sickest housing market going into 2013, even though it has shown some signs of improvement. While some might be encouraged by the 22% increase in home prices last November, the fact remains that Detroit’s housing landscape was hit by a ton of bricks during the crisis – and it will take a long time before it picks itself up.

Real estate prices in Detroit slumped by an average 60% during the housing crisis, and to this day foreclosure rates remain sky high – so much so that some of its homes continue to fetch prices as low as $1.

A sign of the times in Detroit… Image by dharder9475 via flickr.com

Fort Lauderdale, Florida

While the signs are that Fort Lauderdale’s pitiful housing market may have bottomed out in 2012, the city is being held back by an enormous backlog of foreclosures – Florida accounts for the third highest foreclosure inventory in the US, and many of them can be found right here. It’s likely that this oversupply will continue to dog Fort Lauderdale’s recovery prospects for some time to come.

On the up side, there are some positives – home sales rebounded by 14% between September and November 2012, while prices rose by 20% during the same period. Fort Lauderdale might just be entering its recovery period, but it will be a while before the situation normalizes.

Palm trees are about the only thing seeing positive growth in Fort Lauderdale at the moment. Image by wallyg

Miami, Florida

Miami is something of a special case, with a huge spate of foreign buyers taking advantage of its crippled market to snap up its luxury real estate on the cheap. This has even led to talk of a possible bubble, although the prospect remains slim given Miami’s pitiful job market at present.

The poor unemployment rate means that Miami is still seeing a steady flow of delinquencies and foreclosures, with more than 24,000 homes in the process of being repossessed by banks, according to Trulia’s latest figures.  Until Miami can sort out its job situation and address the foreclosure rate, its market will continue scrape along at the bottom.

Miami’s housing outlook remains uncertain heading into 2013 © kenzo – Fotolia.com

West Palm Beach, Florida

Florida’s nightmare extends to West Palm Beach as well, where one in 349 homes was foreclosed upon last July.

West Palm Beach’s foreclosure rates are, sadly, fairly typical for Florida and can be taken as a sign that it’s still feeling the effects of the housing market crash. This is evident in the market’s continued volatility, with home prices continuing to fluctuate wildly. Sales prices fell by almost 15% between June and July, in spite of a general improvement in overall sales numbers. We can expect more of the same during the next 12 months.

West Palm Beach’s homes are looking good, but only from up here.. Image by Captain Kimo via flickr.com

Cape Coral-Fort Myers, Florida

There’s not much going on in Cape Coral either at the moment. The only bright spot to speak of has been the rise in new construction permits, which indicates that building activity might be about to pick up. Even so, no new major developments have got out of the ground just yet, so it will be a while before this has an impact on the market.

Cape Coral’s biggest hurdle – like most of Florida – remains its depressing foreclosure rate. So bad was the area hit that it’s now possible to go on a tour of the city’s foreclosure-hit neighborhoods, which the New York Times says have seen massive drops in property values.

A tour of Cape Coral’s foreclosures isn’t for the feint of heart. Image by ifmuth via flickr.com

Foreclosures down, reports RealtyTrac © TheSupe87 - Fotolia.com

Throughout 2011, one out of every 69 homes were foreclosed on, while lenders repossessed a total of 804,000 homes – compared to last year’s total of 1.05 million homes being repossessed, when the foreclosure crisis was at its peak.

Thousands of communities across the USA have been plagued by foreclosures over the last five years, with a total of more than 4 million homes being foreclosed upon and repossessed. As a result, home prices across the country have tumbled downwards with no to the crisis in sight, until recently.

But is the worst really over for America’s housing market?

Apparently not quite, say analysts. Despite the reduction in foreclosures last year, this can be put down to the fact that lenders took much more time to process them than compared to previous years. The average foreclosure processing time jumped over the past 12 months to 348 days, compared to just 305 days one year ago, which explains why last year’s numbers are lower.

Brandon Moore, RealtyTrac’s CEO, told CNN Money that he expected foreclosure numbers to increase during 2012 as banks got back on track with processing following the robo-signing scandal which slowed things down previously. However, Moore noted that foreclosures were unlikely to reach the level they were at in 2010. Moore pointed out that a number of refinancing programs, such as the Home Affordable Modification Program (HAMP), were seeing some success in helping borrowers to avoid foreclosure by lowering their monthly payments.

Even so, some areas of the country still have big problems with foreclosures. The state of Nevada for example, remains a trouble spot, with one in 16 homes receiving a default notice over the last year. Elsewhere, both Arizona and California continue to face high rates of foreclosures, and are unlikely to improve any time soon, claims RealtyTrac.

New research carried out by Princeton University’s Janet Currie and Georgia State University’s Erdal Tekin has shown that the rising number of foreclosures in states like Florida, California, Arizona and New Jersey appears to be linked to an increase in the number of health problems related to stress.

Foreclosures linked to more stress © Gabriel Blaj - Fotolia.com

The study, which examined foreclosure rates throughout the nation and compared them with the number of hospital visits in the same area, discovered that those places that are in the top 20% for foreclosures in the US saw approximately double the number of hospital visits compared to those places that showed the least foreclosure activity. Only visits to hospital for preventable conditions – conditions that don’t normally lead to hospitalization – were counted in the study.

According to the research, just 100 extra foreclosures in a given area would result in 7.2% rise in the number of visits to emergency rooms for treatment of hypertension in the same area. Additionally, the research also showed an 8.1% increase in diabetes cases in adults aged between 20 and 49 years in the same areas.

Growing numbers of foreclosures in a community were also linked to a 12% rise in the number of people visiting the hospital for anxiety problems, and a staggering 40% rise in the number of suicide attempts that resulted in hospitalization, although these figures are still very low overall.

Speaking to the Wall Street Journal, Janet Currie said that “Foreclosures are having a big effect on neighborhoods, causing everyone to be more stressed out.”

“There is clearly a connection between people’s physical and their economic well being,” she added.