This report of the S&P/Case-Shiller Home Price Indices points to a few cities seeing some stability, one seeing gains and several where prices remain weak. Washington DC is the only place where home prices are rebounding and holding on to their gains. Prices in the capital were up 2.7% in the last 12 months and over 80% from January 2000, long before the boom, the best long term gain. At the other end of the scale is Detroit where, despite gaining in the last month, you can buy a home for about 68 cents on a year 2000 dollar. The Motor City story is not the housing boom and bust as much as it is the auto industry bust.
A common question from reporters in the last few months is why Washington home prices have stood up while most others have faded. The strength of the local economy with the stable economic base provided by the Federal government plus companies and organizations selling to the government or locating in the Washington metro area to be close to the government seem to be a large factor in home prices. While some people talk about a four, or eight, year cycle in Washington DC real estate driven by changing administrations, there is no evidence in the chart of prices since 1987. Apparently the government-driven real estate economy remains solid through changing presidential administrations.
Leaving Washington aside, the cities which saw the highest peaks were sunbelt cities: Miami, Los Angeles, San Diego, Tampa and Las Vegas. Of those, LA and San Diego saw less damage and remain above their recent lows while what we might call the fearsome foursome all made new lows in February. One difference is the extent of construction and over-building in the foursome. Almost anytime I speak with local reporters from Florida, Arizona or Nevada I hear stories of half built and empty homes. Easy money and plentiful land were two pitfalls in the housing boom.
Close behind the sunbelt cities are San Francisco and New York where prices at the peak were more than double their January, 2000 levels. Almost everyone seems enamored of San Francisco, making it the perennially attractive place to move to for most Americans. The tech boom in Silicon Valley is another plus for Frisco. New York also saw prices rise in the 2000s decade and is holding on to most of the gains. Financial services is a large part of the economy and always a big factor in the upper end of the housing markets. The last two decades were good for financial services and certainly didn’t do any harm to New York real estate prices.
One last comment – while no one and no city escaped the boom, bust and great recession, it was more pronounced in some places than others. Cities as diverse as Dallas, Denver and Cleveland saw both fewer gains and losses than some others.