Where the housing market is and isn’t growing, and why
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Steve Chiotakis: Later today, the National Association of Realtors will release how many pre-owned homes were sold in July. Since the housing bubble burst more than 4 years ago, prices are still falling in many parts of the country. Some markets, though, are weathering the downturn better than others.
Marketplace’s John Dimsdale reports.
John Dimsdale: One of the best housing markets in the country is right here in Washington, D.C. And S&P’s David Blitzer says you don’t have to look hard to find out why.
David Blitzer: The U.S. government is a fairly stable employer. Doesn’t shrink massively during recessions. So it gives the whole area a fair amount of stability compared to other parts of the country.
Like, for example, Detroit, where foreclosures and falling home prices continue to depress the market.
Blitzer: The economic base that had been provided by the auto industry up until five, six, seven years ago, is largely gone.
Blitzer says home prices are still falling where the speculative bubble was the biggest: Sunbelt cities like Miami, Phoenix and Las Vegas. But in the Midwest, which didn’t see much of a bubble to begin with, Kansas State University’s Tracy Turner says home values have not fallen as much.
Tracy Turner: There tends to be less pressure from fundamentals such as income growth, employment growth, population growth than in the coastal cities. And there are fewer geographic restrictions than in the coastal cities.
And when home values fall below what buyers owe, people can’t move to where the jobs are, says IHS Global Insight housing economist Patrick Newport.
Patrick Newport: It’s one of the reasons why the downturn has lasted so long. You can’t sell your home because you’re underwater, and if you’re deeply underwater, you’re stuck with the job that you have and you’re stuck with the home that you’re living in.
Until job seekers are more mobile, he says, unemployment will remain high, keeping home values low.
In Washington, I’m John Dimsdale for Marketplace.
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