December 23, 2010

Which Areas Where Most Affected by the Real Estate Bubble Crash?

States Most Affected by the Real Estate Bubble Crash

"Booming Sun Belt cities — Atlanta, Phoenix, Miami, Las Vegas, Tampa — had the most extreme combinations of high prices and oversupply. Houston and Dallas also built plenty, but their prices stayed earthbound and as a result, they don’t seem to have overbuilt. Coastal America had booming prices, but regulatory and natural limits on building restricted construction. And now we see the sharpest declines in the rate of population growth in places that had the most overbuilding. The four states where population growth fell most in 2009, relative to statewide trends in 2000-2008, were Arizona, Georgia, Nevada and — above all — Florida. These are not the states with the worst economic conditions today. (California and Michigan have that honor.) They are, however, places that had particularly extreme housing booms — measured by both quantities and prices. No one should be surprised that their population growth rates have fallen furthest." - Housing Hangover in the Sun Belt, The New York Times' Economix blog, January 12, 2010

StephaneManos Blog
December 20, 2010

As most of you know, the real estate bubble has burst and it is still believed that the real estate market has not yet bottomed out as of 2010. The main reason for the deflating of the housing bubble was due to the large number of homes that were constructed and sold in the years 1997-2005.

The number of houses increased dramatically as about 609,000 new single-family homes were sold during the year 1990-1995. Yet and astronomical 1,283,000 new single-family homes were sold in 2005.

The areas most affected by this real estate crash are the ones that experienced the most construction of new houses and the most gains in new people moving to the areas the fastest. Many suburbs saw huge gains in home sales and increased residents as people moved away from expensive, overcrowded metropolitan areas.

States that are most affected by the real estate bubble crash, which is considered an economic bubble, are Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maryland, Massachusetts, Michigan, Nevada, New Hampshire, New Jersey, Ohio, Oregon, Rhode Island, Tennessee, Utah and Virginia.

New Census Data Shows Which Areas of America are Growing, Shrinking

The Lookout
March 30, 2011

According to newly released census data, beginning in 2000 Americans began fleeing the Great Plains for sunnier climates in record numbers.

The data, as mapped by the site New Geography, shows that North Dakota, South Dakota, Nebraska, and Kansas all had more counties with total population decreases than increases between 2000 and 2010. Meanwhile, southern California, southern Nevada--especially the Las Vegas area--Arizona, Florida, and eastern Texas all saw big population gains.

The metro areas that grew the fastest were all in the west or south. In descending order, they were: Las Vegas, Nevada; Raleigh, N.C.; Austin, Texas; Charlotte, N.C.; Riverside, Calif.; Orlando, Fla.; Phoenix, Ariz.; Houston, Texas; and San Antonio, Texas.

The data also offer information about changes in America's racial makeup. Many of the counties that saw the largest increases in their Hispanic populations were in traditional Hispanic strongholds, including southern California, Arizona, and south Florida. But others were more surprising: Counties in eastern Oregon, Idaho, Wyoming, Kansas, and Oklahoma all saw an influx of Hispanics, reflecting a trend over the last decade in which many recent Latino immigrants have spread beyond urban centers like Los Angeles and Phoenix into more rural parts of the country.

See: They Opened the Borders to Bring in Unqualified Buyers to Aggravate the Housing Bubble and Bust

America's African-America population, too, saw changes. In a reverse of the Great Migration of the 1920s-50s, many younger and more educated blacks moved out of the declining industrial centers of midwestern states like Michigan and Illinois and back to the south, including areas of Florida, Georgia, and even Mississippi. Atlanta replaced Chicago as the metro area with the largest number of blacks, after New York. Today, 57 percent of black Americans live in the south -- the highest percentage since 1960.

Cities Where Economies Are Getting Worse

In California metros, unemployment remains high, job growth sluggish and foreclosures common.

March 16, 2011

Sunny California has been taking a beating lately on our 2011 Forbes cities lists. Stockton took first place as the Most Miserable City for the second time in three years, and four Golden State metros ranked high on our Most Toxic Cities list.

Alas, California also claims the top spots on our newest list: Cities Where The Economy May Get Worse. Riverside ranked No. 1 thanks to a high unemployment rate (13.9%) coupled with weak job growth, a hefty number of mortgage loans 90 days or more delinquent (8.21% of all loans) and a projected migration pattern that finds 4,000 residents expected to leave the area this year.

Other Golden State metros on the list: Stockton at No. 2, Los Angeles at No. 4, Bakersfield at No. 5, San Francisco at No. 6 and Sacramento at No. 7. All of these cities have double-digit unemployment rates and paltry job growth projections. All except LA have housing markets in which prices continue to decline or remain stagnant.

“Struggling housing markets, state government cutbacks, combined with economies that lack industrial diversity and are heavily dependent on low-wage industries, such as agriculture, will hold back job growth.” So says Celia Chen, a senior director at Moody's, about many smaller California metros.

Behind The Numbers

We started with the 85 largest Metropolitan Statistical Areas (MSAs) as defined by the U.S. government’s Office of Management and Budget. These areas include both the cities they are named for and the geographic areas surrounding them, with populations of 500,000 or more. For this list we held up the MSAs to five evenly weighted economic measures.

First we asked Moody’s to provide 2011 projections for job growth, as well as net in-migration, or the estimated number of people moving into (or out of) each city. Moody’s uses a combination of data from Moody’s Analytics, the Bureau of Labor Statistics and the U.S. Census Bureau to come up with projections. Of the 15 cities where economies may get worse, only three (Bakersfield, No. 5; Sacramento, No. 7; and Jacksonville, No. 8) are projected to welcome new residents in 2011; the others will lose residents to other metros.

Job growth too was minimal in the cities that made our list, with projections of less than 1% in all but one city. That less-than-1% statistic is relative to the local unemployment rate, which we also factored into our methodology, using the most current unemployment rate available for each MSA, according to the Bureau of Labor Statistics.

In a city like Stockton, Calif., where unemployment is about 18%, a job growth outlook of 0.54% promises a somewhat dismal future for job opportunities.

On the other hand, Poughkeepsie, N.Y. (which ranked No. 15), boasts a 7.6% unemployment rate (well below the 9% national average) and a 0.43% job growth outlook. Employment offers a bit of good news for Poughkeepsie, but the Hudson River hub made our list for other reasons: a substantial population exodus compared with city size, a housing market that has yet to hit bottom and a significant number of mortgage loans delinquent by 90 days or more.

Lastly we used two housing-centric data points in our methodology. Local Market Monitor, a Cary, N.C.-based real estate research firm, provided us with their 12-month home price outlooks for these metros. LPS Applied Analytics, a Jacksonville, Fla.-based mortgage research company that releases a monthly foreclosure report, supplied the percentage of mortgage loans currently delinquent by 90 days or more. Some of these delinquent loans will be modified or settled in short-sales, but many others will roll over into foreclosures and ultimately become bank-owned properties. It’s a process that wrecks homeowners’ credit and pushes the prices of local real estate down further.

All of the cities on our list claim housing markets with a larger than average number of delinquent home loans on the books. Riverside and Stockton demonstrated some of the highest delinquency rates among the 85 MSAs we assessed.

The good news, at least housing-wise, is that most of the country appears to have hit market bottom, or come close to it. The double-digit plunging home prices and staggering foreclosure rates of the past several years seem to be subsiding--in the case of these cities, at least slowing. [Editor's Note: Others do not agree with this assessment of the housing market.]

See: We Have Not Yet Hit Rock-bottom Prices in Real Estate

Riverside, for example, will see minimal gains in its home prices this year, after a 45% price drop over the past few years from its 2006 peak, according to Local Market Monitor. Even cities like Jacksonville, which ranked high on our list in terms of projected home price declines, will only see a 4% drop over the next 12 months.

It’s also worth noting that several of the big foreclosure cities remain absent from this list: namely Phoenix, Las Vegas and all of the Florida metros except Jacksonville, which ranked eighth on our list. Here’s why: While Florida home prices continue to decline in most metros, and foreclosure and delinquency rates remain high, job growth shows signs of improving, and people are beginning to move back to the Sunshine State, especially to Miami and Orlando. Indeed Phoenix skirted our list thanks in part to a bullish migration projection as well, with 19,000 additional people expected to call the Southwest metropolis home this year.

“Net migration patterns will improve this year in Phoenix, Orlando, Miami and Las Vegas due to the low cost of housing and slight gains in job growth,” explains Chen. “Job growth is expected to turn positive this year in all of these areas, for the first time since 2007.”

Las Vegas remains the top city for delinquent loans (and Nevada the top state for foreclosures) but it skirted a spot on this list, thanks to a strong migration projection as well (13,000 people are expected to move to Sin City this year). That said, Local Market Monitor expects home prices to drop another 4% over the next 12 months, and unemployment vs. job growth leaves much to be desired. Although it didn’t make our list, Vegas merits watching as a city where the economy could get worse.

In Pictures: 15 Cities Where Economies Are Getting Worse

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