Rise of the forgotten housing markets
'Best of' lists reveal surprising trend for 'underdog' cities
By Steve Bergsman, Friday, April 9, 2010.
Flickr photo by Bess Sadler.Earlier this year and last, a number of publications and Web sites attempted to make statistical sense of the country's housing markets by publishing lists: the best housing markets, the worst real estate markets, America's strongest housing markets, etc.
After scrutinizing a number of these charts, I finally came to the conclusion that the turmoil in the real estate, mortgage, credit and financial markets over the past three years has turned urban demography upside down. Whatever you thought you knew about growth, metro expansion plans and cities that attract the most move-ins is probably widely incorrect at this point in time.
Take my city of Mesa, Ariz., for example. When I moved here in the 1970s the city counted about 70,000 people. Today, its population rests somewhere between 460,000 and 500,000, larger than Kansas City, Pittsburgh, St. Louis and many older metros in the Midwest and East that we think of as "big cities."
In the 1990s, Mesa was the fastest-growing city in the country. For 2009, the big question about the city's population was whether it dipped for the first time in decades. The same question holds for the neighboring burg of Phoenix.
While cities like Mesa and Phoenix, and for all practical purposes numerous other metros across the South and West were growing, older cities in the Northeast and Midwest stagnated or declined. That was the pattern for the 50 years leading up to the subprime blow-up in 2007 and subsequent recession that still lingers despite what the government tells us.
So, the oddity of all the lists put together about last year's demographics is really how topsy-turvy everything became.
Let's start with the Forbes magazine list of America's 25 Strongest Housing Markets, which was based on a Moody's Economy.com compilation of the country's real estate markets that were nearest to recovery a year ago and expected to be active, although not necessarily vibrant, during 2010 and 2011.
This list was simply based on housing prices, and according to Forbes no metro area would see any increase in housing prices before the end of 2009. However, a number of cities are verging on forward movement for 2010 and 2011 in regard to housing prices, and that made them standouts.
Almost all cities on this list has one thing in common: they missed the boom. When the rest of the country went mad for housing, creating frothy, bubbly markets, the single-family markets in these cities were flatter than an open bottle of champagne the day after New Year's.
But, in our inverted world, the have-nots have become the haves, so the Forbes list of "strongest housing markets" includes cities such as Syracuse and Rochester, N.Y.; Pittsburgh; Buffalo, N.Y.; El Paso, Texas; Little Rock, Ark.; and even New Orleans, which has benefited from the vaults of money dumped into the Big Easy after Hurricane Katrina destroyed almost everything. Even the New Orleans "Aints" made it to the Super Bowl.
In the first quarter, Irvine, Calif.-based RealtyTrac issued a report on metro area foreclosure rates for 2009. Of the 200 largest cities in the country, the five cities with the lowest foreclosure rates were: Tuscaloosa, Ala., College Station-Bryan, Texas; Fayetteville, N.C.; Syracuse, N.Y.; and Charleston, W.Va. ...CONTINUED
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Submitted by Real Estate Data Junkie on April 9, 2010 - 4:48am.
Interesting article,
As a real estate forecaster for undeveloped international markets we are seeing much of the same changes in demographic growth also. Some of the drivers we see changing growth include crime, new access and GDP from the out-migration countries.
Thanks, element-360.com
Submitted by Jennie Phipps on April 9, 2010 - 6:03am.
I lived in Utica, NY, for a couple of years in the early '90s. It's about 50 miles east of Syracuse and it, too, has appeared on a number of these housing lists as a place where home prices are on the increase. As a woman who had to rent the very nice home she owned there for six years before she was able to unload it at a loss, the only way for Utica home prices to go was up. Geeks with slide rules are a big part of the reason we're in this economic mess to begin with. Stop paying attention to them.
Jennie
Submitted by Barrett Powell on April 9, 2010 - 9:25am.
I live in one of the bedroom communities of Raleigh, NC. I would say the reports, at least concerning Raleigh, are dead on.
There are many reasons Raleigh and the surrounding Triangle (Raleigh-Durham-Chapel Hill) have continued to be a "best place to live".
First, we are a University region, with three major universities; NC State - Raleigh, Duke (Go Devils!) - Durham, and UNC - Chapel Hill. Additionally the area is home to many leading high tech and biotech firms. SAS, voted one of the best places to work in the U.S. is located in Cary, another highly desirable bedroom community of Raleigh.
The area also greatly benefits from the wisdom of our early community leaders who established Research Triangle Park, one of the largest research parks in the U.S. The Park is centrally located between Raleigh, Durham, and Chapel Hill and is home to some of the largest technology (IBM) and biotech (Glaxo) companies in the world.
But the most important factor benefitting our area's outlook is the fact our community has never seen double digit appreciation rates. Instead, we have seen the area chug along at between 4 and 6 or 8%, even during the heyday.
So even though we have seen a correction in prices, it is nothing compared to the high flying markets to our West and South. Once again the story of the tortoise and the hare continues to teach us a lesson.
Barrett Powell, Owner/Broker/Consultant
Southern Advantage Companies
RSA Software & Consulting
288 East Street, PO Box 1427
Pittsboro, North Carolina 27312
http://www.REMAXChatham.com
http://wbarrettpowell.wordpress.com
barrett.powell - Skype
wbarrettpowell@gmail.com
Submitted by berge charles on April 9, 2010 - 9:41am.
The underlying premise for growth in different areas of the country has always been based on real estate sales and/or building permits. What happens when more and more people choose to not own a conventional home? Perhaps they no longer wish to be burdened by punitive property taxes, government regulation, or other ownership costs. The demand for traditional housing could gradually fade away. Conventional real estate wisdom could be stood on its head. It's not impossible to envision a future where people choose to inhabit portable (RV) life spaces and have the freedom to spend time in different areas - and not be tethered to or burdened by traditional real estate ownership. If actual and perceived demand for conventional housing continues to decrease, property values are likely to remain unstable. Mabye it's time to become invested in the new portable lifestyle? Just an idea..
auctionrefer.com
Submitted by Susan Templeton on April 9, 2010 - 10:46am.
How much of your examination has noted effects of major factors like well funded college or military populations? (Fayetteville, NC is the military seat and Raliegh, NC has the double seat of state capital and universities.)
Submitted by LookRealty on April 9, 2010 - 12:06pm.
Great Article! I think you are correct that many data points are necessary to fully analyze the potential direction of a market but building permits is the biggest in my opinion overall. As for the ending markets that are Have-Nots. Not really per se! Its just that each of those markets were heavily sub-prime loans as these area's are thought to be the Goldmine of places to live... and they are. Each of them will stabilize to where they should have been in the first place and then they will expand again albeit slowly. San Jose's median pricing market has increased by 20% in the past year so not a bad start.
John Perkins
http://LookRealty.com
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