Earlier this year and last, a number of publications and Web sites attempted to make statistical sense of the country’s housing markets by publishing lists: the best housing markets, the worst real estate markets, America’s strongest housing markets, etc.
After scrutinizing a number of these charts, I finally came to the conclusion that the turmoil in the real estate, mortgage, credit and financial markets over the past three years has turned urban demography upside down. Whatever you thought you knew about growth, metro expansion plans and cities that attract the most move-ins is probably widely incorrect at this point in time.
Take my city of Mesa, Ariz., for example. When I moved here in the 1970s the city counted about 70,000 people. Today, its population rests somewhere between 460,000 and 500,000, larger than Kansas City, Pittsburgh, St. Louis and many older metros in the Midwest and East that we think of as "big cities."
In the 1990s, Mesa was the fastest-growing city in the country. For 2009, the big question about the city’s population was whether it dipped for the first time in decades. The same question holds for the neighboring burg of Phoenix.
While cities like Mesa and Phoenix, and for all practical purposes numerous other metros across the South and West were growing, older cities in the Northeast and Midwest stagnated or declined. That was the pattern for the 50 years leading up to the subprime blow-up in 2007 and subsequent recession that still lingers despite what the government tells us.
So, the oddity of all the lists put together about last year’s demographics is really how topsy-turvy everything became.
Let’s start with the Forbes magazine list of America’s 25 Strongest Housing Markets, which was based on a Moody’s Economy.com compilation of the country’s real estate markets that were nearest to recovery a year ago and expected to be active, although not necessarily vibrant, during 2010 and 2011.
This list was simply based on housing prices, and according to Forbes no metro area would see any increase in housing prices before the end of 2009. However, a number of cities are verging on forward movement for 2010 and 2011 in regard to housing prices, and that made them standouts.
Almost all cities on this list has one thing in common: they missed the boom. When the rest of the country went mad for housing, creating frothy, bubbly markets, the single-family markets in these cities were flatter than an open bottle of champagne the day after New Year’s.
But, in our inverted world, the have-nots have become the haves, so the Forbes list of "strongest housing markets" includes cities such as Syracuse and Rochester, N.Y.; Pittsburgh; Buffalo, N.Y.; El Paso, Texas; Little Rock, Ark.; and even New Orleans, which has benefited from the vaults of money dumped into the Big Easy after Hurricane Katrina destroyed almost everything. Even the New Orleans "Aints" made it to the Super Bowl.
In the first quarter, Irvine, Calif.-based RealtyTrac issued a report on metro area foreclosure rates for 2009. Of the 200 largest cities in the country, the five cities with the lowest foreclosure rates were: Tuscaloosa, Ala., College Station-Bryan, Texas; Fayetteville, N.C.; Syracuse, N.Y.; and Charleston, W.Va. …CONTINUED
The Forbes list considered only metros of more than 500,000 people, but also about a year ago, a columnist for SmarterSpend.com put together a couple of lists on the best and worst housing markets. This columnist simply looked at average housing-price change per metro area — and she included markets smaller than 500,000 people.
Her list of the top housing markets also included markets that no one ever considers a "best" in anything: Bozeman, Mont.; Logan, Utah; Morgantown, W. Va.; Trenton, N.J.; Lander, Wyo.; Fargo, N.D.; Billings, Mont.; Bloomington, Ill.; Minot, N.D.; and Paducah, Ky., among others
I’m not sure when Trenton was last listed as a leader in anything, other than incidents of crime. What I noticed in the top 25 of the SmarterSpend.com list was a large number of smaller cities in places like Montana, West Virginia, Oklahoma and the Dakotas.
As the columnist noted, Montana, South Dakota and Missouri didn’t participate in "America’s mortgage blunder," and most of the cities in these states were still registering upward momentum in housing prices.
The list that I thought was most interesting, only because it can be assumed to be predicative, was the one put together by Hanley Wood Market Intelligence and the trade publication Builder. It was also done about a year ago. Called the healthiest housing markets, it was a survey based on building permits.
Now I have no idea if everything that was permitted was actually built, but these Top 10 cities looked strong one year ago, according to the data points that were important to Builder: Washington, D.C.; Fayetteville, Ark.; Indianapolis; Seattle; Raleigh, N.C.; and the Texas cities of Dallas, San Antonio, Fort Worth, Austin and Houston.
When considering building permits, lists look quite different from those based on housing prices.
These lists are a little bit old, so I’ll conclude with one published by HousingPredictor.com early this year. This one is called the Best Investors Real Estate Markets in 2010 and uses employment data, which some pundits, rightly so, would consider the leading economic indicator for a strong housing market.
The Top 10 cities residing on this list include a number of fresh faces, chiefly university towns such as Austin; Lawrence, Kan.; and Auburn, Ala. Also making the grade were Huntsville, Ala.; Little Rock, Ark.; Raleigh, N.C.; Monroe, La.; Billings, Mont.; Loveland, Colo.; and Las Cruces, N.M.
The other oddity when comparing all the lists is that there is little overlap except in the cases of a few cities: Austin, Raleigh and Billings. Maybe we can conclude that these three metros are the real growth cities for the next decade based on numerous data points.
Nowhere on any of those lists are the old standbys — the real haves of the past two to three decades. Gone from the beloved are Mesa, Phoenix, Miami, Orlando, Tampa, Jacksonville, Atlanta, Riverside/San Bernardino, San Jose, Irvine, Sacramento, San Diego, Las Vegas and Portland.
These cities have all become have-nots.
Steve Bergsman is a freelance writer in Arizona and author of several books, including "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade."
***
What’s your opinion? Leave your comments below or send a letter to the editor.
