Cities Where Homes Are Losing Most Value

Merced, Calif., is a quiet, residential city an easy drive from Yosemite National and Pacific Coast beaches. It's also a perfect case study for the aftermath of the housing crisis.

Homes at the median level in Merced have lost 62% of their value from the second quarter of 2006, when they peaked at $336,743, the biggest drop anywhere in the country, according to data provided to Forbes by Local Market Monitor, a Cary, North Carolina-based real estate research firm. Earlier, home building and buying grew exponentially in Merced, but the metro now suffers from a whopping 16.4% unemployment rate, according to the Bureau of Labor Statistics, reflecting a drop-off in building industry jobs and a grim housing market.

Providence, R.I., where values sank the most in the Northeast;Detroit, the hardest-hit market in the Midwest; and Port St. Lucie, Fla., the biggest loser of value in the South, have also suffered from their local market's slide.

Photos: Cities Where Homes Are Losing Most Value

Full List: Cities Where Homes Are Losing Most Value

It's not news that Las Vegas, where value has dropped 48%,Miami (down 38%), and Orlando(down 31%) saw a burst of homebuilding fueled by bad loans and rampant house flipping between the years of 2002 and 2006, and that those building bubbles subsequently collapsed. But it's the exurban cities just outside of easy commuting distance from the most desirable West Coast and Sunbelt metros where home values have taken the biggest pounding.

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