While doesn’t seem like much of a surprise that housing markets in places like Las Vegas and Phoenix—economies so dependent on extravagant vacations or retirement—are seeing the biggest drops, I’m curious as to why cities like Cleveland, Dallas and Denver aren’t hit as hard. It does seem to have something to do with what the homes cost before prices started plummeting, but then again, I know jack shit about economics. What else is it about these cities’ economies that makes their housing prices more resistant to the recession?

Either way, MKM Partners are predicting that the housing market will bottom out at some point this year.

According to numbers released Thursday, a 20-city average of home prices fell 2.8 percent in January, faster than the 2.6 percent drop recorded in December. Overall, the 20-city Case-Shiller index reported by Standard & Poor’s has fallen 19 percent in the past year and nearly 29 percent from its peak in 2006.

“The home price bubble has essentially vanished,” Michael Darda, chief economist at MKM Partners, writes in an analysis of the Case-Shiller data.

He’s optimistic that a combination of lower prices and low interest rates is starting to lure buyers back to the market — and will eventually work off the current large inventory of homes for sale.

“This is a powerful combination that we believe will create a bottom in the housing market in 2009,” Mr. Darda predicts.

He reckons that once the for-sale inventory drops to a seven- or eight-month supply of homes — down from about 10 months today — an end to home-price declines will be near.

3cf6/1238540000-graphic2.0.jpg

Via Christian Science Monitor.

Grant Brissey covered everything from hard news and technology, to music, film, and visual arts during his time working for The Stranger. Grant's work has also appeared at Geekwire, and in Billboard,...

33 replies on “Cleveland, Dallas and Denver”

  1. My husbands company might be transference us to DFW this summer (eeep), and regardless of the numbers on that chart home prices are ridiculously low. We are talking 4 bed 2.5 bath and a swimming pool for $150k low. In the city. We couldn’t even find a condo in Kent for that price.

  3. NYT has a pretty good graphic.

    http://www.nytimes.com/interactive/2008/…

    None of those cities were subject (as much) to the housing boom that LV and Phoenix or even the price bubble that much of the rest of the country saw over the last few years, so when the recession hit, there weren’t thousands of empty residences waiting for owners.

    Now, why they weren’t as much a part of the bubble is the real question.

  5. @4, Oddly, until late last year, my only cultural conception of Cleveland was from the Drew Carey show. Imagine my surprise when I started hearing everyone talk about how shitty a town it was…

    And I’d ask the same thing about Las Vegas and Phoenix. But then I realized that, having grown up in and loved Seattle, my priorities in housing are horribly skewed in comparison to the average American’s. there’s no accounting for other people’s taste, I guess.

  8. If you’ve not had a chance or inclination to read the summaries of the work and theories he’s done over the last couple years explaining all that, Shiller his own bad self is coming to town to talk later this month, I think at PLU of all places. Listening closely while he’s talking in the same room might help a person find that eureka moment.

  9. Phoenix is an odd example, their major industry was growth. Their unemployment rate is below national average, but with the economy not creating new jobs, Phoenix’s lack of new residents is hitting them disproportionately hard economically, from what I understand at least.

  10. The numbers in the chart are a bit crude. I bet homes within the Seattle city limits have lost far less value than home on the Sammamish plateau. This trend is true in many cities (i.e., D.C.). Which makes sense, that prices of a scarcer asset (land in the city) would be relatively robust.

  11. I’d also, once again, like to point out that the San Francisco data in that chart is actually Bay Area data. It’s referencing cities like Stockton, not SF.

  12. Denver hasn’t felt the pinch because it’s the Chosen City of God.

    But seriously, I haven’t got a fucking clue why we haven’t been hit as hard as everybody else.

  14. The ticking time-bombs are mortgage rates.

    Prices may stabilize this year, but when the mortgage rates rise from the currently artificially-low 4.85% up to a more reasonable 7%, you’ll probably see them fall a lot harder… best case, they stay flat in nominal terms.

  15. Cleveland peaked at 1.23 times its January 2000 index value … Dallas 1.26, Denver 1.40, compared to Seattle’s 1.92 or Miami’s 2.81.

  16. @13- I can’t tell if you’re being sarcastic. Being from New England, I consider the weather in Seattle to be amazingly warm in the winter and nicely temperate in the summer. I also find the people OVERLY friendly.

  17. Some cities, like Cleveland, began their downward spiral ahead of the rest of the country. It is only 5% after already losing 30%.

  20. Ronk @15 has the story. If you chart house prices since the beginning of time, say a hundred years ago, to today, it’s a nice steady line — until the last decade, when it spikes sharply upward: the bubble.

    There’s probably a story to be told about involvement in the drug trade, too. Much of Florida’s “growth” was actually drug money laundering, an activity lenders like WaMu were delighted to participate in. That’s where the houses doubling or tripling in value literally overnight came in. Yes, houses in Florida sold for $300,000 one day, $600,000 the next; actual market value today $35,000. But then, Florida has been almost entirely a criminal enterprise since the 1920s.

  21. Perhaps people are getting tired of the south? There are parts of the south I really like (Austin, Athens, Charleston) but the explosive growth down there for the last decade was unreal and totally at odds (to my way of thinking) with the actual appeal of the place. My father and step-mother have lived in Atlanta for 30 years but would leave in a second if they could get out from under their house, what with the sprawl and rednecks and traffic and air pollution.

  23. Earth to Seattleites: the Zillow one year numbers for Capital Hill and Seattle are same as Kent about 15%. And Issaquah and Sammamish are more like 10%.

    But if you want to feel like you’re homes are more protected in the downturn, who am I to burst your bubble?

  24. As Dougsf points out, Phoenix’s business was growth. Not retirees or vacationers. It was commonly reported when I lived there at the height of the boom that new home construction was 50% of the economy. This is clearly unsustainable for very long.

  25. Where do people go when they leave NYC, SF, Seattle and the like? The real world. I grew up near Buffalo and had not even heard of studio apts until I moved to San Francisco. Let’s be honest. Seattle is not representative of places like LA, NYC and SF because it’s still relatively affordable, but how many people in these “hot” cities live like they really want to? My bed is in my closet, and I have no car. Cities like this are infantilizing in a sense; you’ll never own a home or king sized bed, so you live off the idea of being in “the middle of it all.”

  28. Sigh.

    It looks like I’m going to have my work cut out adjusting your expectations about housing prices in my new job, starting tomorrow, as the Undersecretary of Expectations Adjustment for the Treasury.

    Never mind, I’ll get my intern Mary Cheney to work on that.

  29. 21 If the people who came to Atlanta over the past 30 years would go home there wouldn’t be any sprawl and traffic and air pollution.

  31. Dallas never experienced a housing boom like So Cal, Phoenix and So Fl. The market was great, but housing prices remained very reasonable. They haven’t fallen that far because they didn’t rise that far. That being said, it seems like the home market sucks here. There is a lot on the market and very little movement. People are as frightened about the economy here as they are everywhere else.

  32. In Dallas, there simply was no housing bubble. Both policy and geography account for this.

    Permit policies in the Metroplex are famously developer-friendly. The result is a plentiful, ever expanding supply of cheap housing. A metroplex seller seldom has pricing power.

    Just as critically, there are no natural (read: the sound, lakes) barriers to development. Just land and land and more land. It just stretches out forever. If things threaten to get pricey in one place, developers buy up land a few miles further out and start building.

    I am not saying either of these are good things. In fact, I love Nabokov’s slighting description of the entire state of Texas as a “drought-stricken plain”.

Comments are closed.