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

Property markets are in decline, but where is worst off? Image courtesy of howzey @ flickr.com

Okay, but we knew that already right? Ever since 2008 when the recession kicked in, housing markets across the country have fallen on hard times, with thousands of homeowners going into foreclosure or suddenly owing more on their mortgages than what their home is actually worth. But while some areas have seen a gradual decline, other areas have quite literally fallen into the abyss. Let’s take a look at just how bad things have gotten in those areas with a look at America’s top five WORST housing markets:

(Results based on percentage change in median sales price between now and 2006. Data courtesy of Zillow)

5: Altamonte Springs, FL

% Change: -41.3

Altamonte Springs fortunes have fallen fast with the housing bust. According to the latest stats from Zillow, the median value of a home in the city stands at $86,000, while the median sales price comes in at a poor $66,900.

4: Lehigh Acres, FL

% Change: -42.2

Leihigh Acres, in Fort Myers, is what’s known as a “census-designated place”. During the early 00s, the area saw a huge boom in its housing market, reaching its peak in 2006 with 7,500 new homes being built. Fast-forward three years to 2009, and home sale prices had crashed by a whopping 80%. Naturally, foreclosures have sky-rocketed, while unemployment shot up from just 3.5% in 2007 to 9.8% in 2011. Zillow lists the median home value at $63,700, while median sales were recorded at $65,200.

3: Trenton, NJ

% Change: -46.0

Trenton has fallen a long way from its glory days of the post World War II period. Formerly a big manufacturing center, like many other industrial cities, Trenton’s economy has steadily declined for decades. As manufacturing jobs slowly dried up, the city fell on hard times and many residents moved away from New Jersey’s state capital. Crime levels have shot up, and Trenton is now ranked as America’s 4^th most dangerous city for those with populations ranging from 75,000 to 100,000. Naturally, once the housing market collapsed and the recession hit home, things got a whole lot worse. The city faces record unemployment levels, and while median home values average $60,700, median sales come in at just $38,000.

2: Pontiac, MI

% Change: -47.4

Being so close to Detroit, it comes as little surprise that Pontiac has been hard hit. Pontiac’s fortunes declines alongside those of the American auto industry, which served as its economic base. The city was once the home of both the extinct Pontiac brand and the primary truck factory of General Motors. Not any more. With the loss of those two facilities, Pontiac crashed to the extent that in 2009 the city had to go into receivership.  The city’s population has declined by 30% since the 1970s, standing at just 59,575 in the last count (US Census). Zillow’s Home Value Index gives median home values at $33,800, and median sales prices at a miserable $24,000.

1: Homestead, FL

% Change: -48.8

Take a glance around Homestead, and you’d be forgiven for thinking it was just another ordinary working-class area in Florida. But a closer look reveals a staggering amount of disarray. Homestead was one of Florida’s prime boom towns pre-2006, but many of the homes built during that period are now either in foreclosure, delinquent, abandoned or not even finished. Even worse, Homestead has seen a far greater deterioration of its home values than most other Florida cities. With a percentage decline of 48.8% in its home values, Homestead stands out as the worst city in the whole of the US. Zillow lists median home values at $76,000, while median sales were $96,400 last August. With high unemployment and high levels of crime thrown into the mix, Homestead is all in all, a rotten place to be stuck in right now.