Real Estate
The Strongest and Weakest Housing Markets
Across the country, home values have tumbled. But there are still a few real estate hot spots where prices actually increased in 2008.
By Louis Jones, Kiplinger's Personal Finance
May 2009
Advertisement
It’s no secret that the real estate market has been hammered. Nationwide, median home values dropped 18% in 2008, according to the most recent data from Fiserv Lending Solutions, a home-price research company. And in markets such as California’s Central Valley, where speculative building has yielded more homes than jobs, prices are down 30% to 38%.
In a few pockets of the country, though, home values have held their own, and some have even seen slight increases. The best place to own a home right now? Texas. Relatively conservative lending practices in the Lone Star State have buttressed homeowners from the worst of the subprime-mortgage mess. Additionally, Texas has a vibrant and diverse manufacturing sector, which has kept unemployment—and foreclosures--low.
The hardest-hit metro areas have been in the Central Valley and the Southwest, where speculative building and subprime loans a few years ago inflated the housing bubble. Now, the recession and job losses are pushing more homes into foreclosure. In turn, foreclosure bargains are luring new home buyers into the market and increasing number of sales but dragging median home values further down.
To see the ten metropolitan areas where median home values have increased the most, take a look at our slide show, Ten Cities With Rising Home Values.
And to see where home values have dropped the most, check out our slide show, Ten Cities Where Home Prices Have Plummeted.
Researching the top ten cities where home values increased in 2008, we identified a few characteristics of successful real estate markets. Not every city on our list shares all of these characteristics, but a combination of them has spelled success for many metro areas.
A diverse set of industries. When a community relies too heavily on one sector, changes in that industry can be devastating to the local economy. A solid blend of midsize manufacturing and retail companies minimizes unemployment and keeps the local economy stable.
A college or university. In State College, Pa., for example, Penn State University is the local economy’s lifeblood, keeping housing prices on an even keel. But even in towns without major universities, smaller community colleges can provide secure jobs and attract home buyers.
A major hospital. Health care is one of the few industries still growing during the recession. Hospitals, especially regional ones, provide lots of jobs over large areas and help to stabilize housing values.
A strong community of retirees. While this doesn’t hold true for all cities that attract retirees (see Naples, Fla., in our list of the ten most depressed housing markets), it does in College Station, Tex. and Kingsport, Tenn., where retirees buy homes and give local economies a boost.
Reader Comments (6)
Posted by: Nomen at 05/14/2009 12:24:11 PM
I would be very suspicious of cities which claim that property values haven't dropped much. There seems to be conspiracy between Realtors and local politicians in many places. In my area property assessments just received went up an average of 7% and several unnecessary new building projects and tax hikes were rammed through in recent months along with extensive PR campaigns about how well the local economy was doing compared to the rest of the country. Then we suddenly have thousands of permanent layoffs and thousands more on temporary layoff. Records show that of the much fewer homes sold in 2008 the average price was just 1%(NOT 7%) higher than a similar home the previous year. Many taxpayers began protesting the increases. Now we are being told that our current assessments are based on a formula starting at the beginning of 2008 and the three years before. We are now over-assessed, over-taxed,and have thousands out of work. It certainly is NOT better here. Detroit is beginning to look prosperous by comparison. Our local government budgets should be in the far infrared by next year.
Posted by: Cinzia at 05/14/2009 03:48:06 PM
There is an additional reason why home prices have dropped in your ten featured cities and not in those ten others. The most desirable places to live are in the southwest and California where there is diversity of opinion and a multicultural population. Who wants to live in the deep South where many are still fighting the Civil War and religious values prevail over common sense?
Posted by: jim reynolds at 05/19/2009 04:30:22 AM
As far as the "best" places to live it's hard to ignore the Northwest. And the South has its charms as well. I've always found my Arkansas relatives to be some of the most genuine and down-to-earth people anywhere. I just don't talk politics and religion with all of them. Besides, I'd rather have some black-eyed peas, fruit cobbler, a glass of tea and just enjoy their company.
Posted by: Frank at 05/19/2009 06:34:17 PM
All the posts so far are right in their own way, but the article says it all, a diversified economy is the best way to keep communities prosperous. In the DC area (and by extension Baltimore and central MD where I live) housing prices are stable or only slightly falling because of the sheer number of government and especially government contracting jobs. But in keeping with my point the economies of MD and VA are very diversified, both having strong shipping, retail (trickling from gov. jobs) and agriculture sectors and a good deal of light manufacturing. Communities like Detroit and Pittsburgh are getting hammered because they both relied on only ONE industry, in their cases Automobiles and Steel. I don't agree however with retirees being any indication of a boost to economies. Sure retirees spend (most in moderation) but they don't work, they don't produce. Florida, the SW and golf courses all over are getting hammered because those economies were bases around retirees. The other examples given like College Station TX, is a college town, and Income-Tax-Free TN with Appalachia, low densities and a low cost of living never had much of an economy to get nailed in the first place.
Posted by: Steve at 06/01/2009 04:22:37 PM
I believe California as a whole has had larger declines in property values in the last couple of years than probably 45 other states. I happen to live in the South, with strong Religious values. I certainly hold those values much higher than the price of our real estate, which by the way, is holding it's own. Due in large part to our diverse culture, oil, Mississippi River, port activities (shipping goods all over the world), Stennis space center, steel and ship manufacturers, we remain a very viable economy with property value declines far less than other parts of the country. Oh! we also have some of the best food in the world? One last note. When has there ever been a conflict between Religious Values and Common Sense?? Try reading the Bible!!
Posted by: Doreen Zelma at 06/12/2009 10:54:21 PM
We Texans, as the article points out, are certainly holding our own. Having a variety of price points, particularly in Austin has helped, in addition to strong educational, medical, technological and music sectors feeding into our economy. We are kind of in our own little eco-sphere. The price points that are moving the slowest are those over $300,000. My hope is that as the first time home buyers buy up the inventory...sellers can move up to higher price points. www.supportlocalaustin.com