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The housing bust came late to Boise, Idaho. While home prices in other cities around the U.S. began their drastic descent in 2007, Boise's home prices didn't feel a price pinch until the end of 2008. Housing in Idaho's capital wasn't hit particularly hard by the subprime mortgage crisis, but it certainly was affected by the economic downturn. High unemployment and a wave of unemployment-related foreclosures have caused home prices in the City of Trees and its surrounding suburbs to plunge.

In 2011 alone, Boise homes suffered a drastic 13.4% loss in value. This year isn't likely to offer relief, with prices projected to slip an additional 2.5%. These drops landed Idaho's capital on our watch list of "Cities Where Home Prices Are Falling Dangerously."

"Prices in Boise proper, specifically, haven't come down quite as much as people expect, but in other areas around the city, prices have come down as much as 50% from where they were a few years ago," says Cristina Pescaru, an agent with Gold Key Real Estate in Boise. "I think we absolutely haven't seen the bottom of the market here."

The folks at Local Market Monitor, a real-estate research company in Cary, N.C., compiled a list of the cities that suffered relatively big home price hits in 2011, with more projected through the next 12 months. The researchers sifted through market data for more than 300 metropolitan statistical areas and metropolitan divisions, as defined by the U.S. Office of Management and Budget. The company, which releases quarterly housing market reports, crunched home prices from October 2010 through September 2011 and calculated price projections through September of next year. For its projections, Local Market Monitor took into account job growth and unemployment rates, population growth, sales and rental prices, and something called "equilibrium home price," which is a gauge of where the average home price should realistically lie based on economic data, versus where it actually is.

Every one of the 13 markets that made our list suffers from a glut of foreclosures. "Foreclosures are continuing to weigh down home prices in hard-hit foreclosure markets as the average sales prices of foreclosure-related sales drop," explains Daren Blomquist of RealtyTrac, a foreclosure listing site. Cities that made our list, such as Phoenix and California's Stockton, Fresno and Bakersfield, also rank among RealtyTrac's top 20 metro areas for foreclosure rates. Fifty percent or more of all completed home sales this year in these cities were distressed (either pre-foreclosure or bank-owned) -- a factor that pulls down the prices of nondistressed homes both in terms of appraisals and home sellers' efforts to compete for buyers.

Not surprisingly, the nation's foreclosure capital, Las Vegas, experienced the worst price drops of any major metro last year. The Sin City's home values slid 15.2%, compared with 2010, and Local Market Monitor expects an additional 5% drop in 2012. More than half of all completed sales were distressed.

Another foreclosure-studded state where home prices continue to get hammered is Florida. Orlando and Jacksonville lost 11% and 9% of their home values in 2011, respectively, with 9.4% and 7.7% losses predicted in 2012. The metropolitan division that includes West Palm Beach also landed on our list. Despite close proximity to posh Miami Beach and Palm Beach, where higher-end sales were frequent last year, the less-expensive West Pam Beach area continued to struggle.

Ingo Winzer, the founder and president of Local Market Monitor, says two things are driving the dive in Sunshine State markets: too much inventory and too few jobs. Construction backstopped a sizable chunk of Florida's local economies, as developers built spec homes for an anticipated deluge of baby boomer snowbirds who, thanks to the current economy, have yet to retire. "First, a lot of homes were built, maybe more than should have been built, and second, while population growth in Florida will eventually sop up those properties, right now there's no work, so we have large numbers of homes sitting empty . . . causing prices to fall," he says.

There is some hope to be had by owners located in other cities across the country: The home price hemorrhages nearly every market experienced in the past several years are subsiding. Nationally, prices dropped only about 4.5% last year. Compared with the roughly 35% loss the U.S. housing market as a whole has taken since the economic downturn, 2011's drop, while agonizing, means the free fall is over.

"A lot of markets are still going to have some problems economically, but overall I think in most of the country's cities, we are seeing a bottom in home prices," says Winzer. He cautions that a bottom in no way translates to a speedy price recovery. Rather, he expects prices to hover at these lower levels for years.

 
13 cities where home prices are falling dangerously
Metro AreaHome price drop from Oct. 2010 to Sept. 2011Projected price drop through 2012Average home price
Stockton, Calif.-8.2%-8%$152,400
Bakersfield-Delano, Calif.-8.5%-6.8%$129,700
Atlanta-Sandy Springs-Marietta, Ga.-8.5%-8.3%$170,800
West Palm Beach-Boca Raton-Boynton Beach, Fla.-8.5%-8.7%$211,000
Tacoma, Wash.-8.8%-7.4%$220,400
Jacksonville, Fla.-8.9%-7.7%$179,900
Sacramento-Arden-Arcade-Roseville, Calif.-9.3%-8.5%$195,900
Orlando-Kissimmee-Sanford, Fla.-10.9%-9.4%$159,700
Fresno, Calif.-11%-9.9%$154,200
Tucson, Ariz.-11.9%-11.1%$169,900
Phoenix-Mesa-Scottsdale, Ariz.-13%-3.3%$152,000
Boise City-Nampa, Idaho-13.4%-2.5%$139,000
Las Vegas-Paradise, Nev.-15.2%-5.1%$121,900

Source: Forbes.com, Local Market Monitor

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