by Jim Giuliano
At least for now, the economies, and business, in these five cities and their surrounding areas don’t appear to be rebounding, especially in one market that saw its worst decline ever.
Standard & Poor’s Case-Shiller Index shows that the slide in housing prices eased in most markets in February and March – and that’s good news. The index and data from the National Association of Realtors painted a different picture for five major markets in the United States, indicating that business in general in those markets is still seeking a bottom before rebounding.
The five down-trending markets:
Housing prices fell 4.9% in Detroit in March, according to the latest figures in the Case-Shiller Index. That marked the city’s largest monthly decline since January 1991, when S&P’s began data collection. Houses in Detroit are selling at about what they cost in 1995, and could go lower.
New York City
In March, the Big Apple saw its largest-ever monthly decline, at 2.5%. The interesting part of the trend is that until March, the city had avoided the steep decline in prices that afflicted many other metro areas. Then the bottom fell – and it appears it’ll keep falling.
Economists speculate that the layoffs and reorganizations in the financial markets are just beginning to have a long-lasting effect on New York.
Homeowners in Phoenix, dizzy from a 53% drop in prices from their peak in June 2006, are likely to see further declines, as shown in March, when prices fell 4.5%.
Phoenix is the poster city for rampant Sunbelt overbuilding that took place in the last 10 years. The hope is that such cities are still attractive to those looking to make a move when the economy picks up. The reality is that the city hasn’t reached that point yet.
The Pacific Northwest remains a desirable place to live, witnessed by the fact that Portland’s home prices are above the national average. That market may be threatened, however, as prices fell 2.1% in March. (Home prices in Seattle were down 2.0%.)
The culprit: a lagging local job market. Portland’s unemployment rate was 11.6% in April, well above the national average of 8.9% for the month.
The dubious “winner” in the worst-market sweepstakes was Minneapolis, where prices fell 6.1% in March, the largest monthly decline of any metro area since data tracking began in 1987.
What fueled the drop: More than half of all March home sales in Minneapolis were due to foreclosures, mostly “short sales,” according to the Federal Reserve Board. When a lot of houses get sold for less than what the seller originally paid, the indicators are bad for housing and economic prospects in general.