Jeremy Hobson: We just got a mixed picture on home prices from the closely watched Case-Shiller Index. It says home prices fell 3.8 percent in August, though prices rose in 10 of the 20 cities in the survey.
And that’s where we’ll start now with Juli Niemann, analyst with Smith, Moore, and Company, who is with us live from St. Louis. Good morning.
Juli Niemann: Good morning.
Hobson: Juli, let’s start with the good — biggest price increases in Detroit, Chicago and DC — what’s the story there?
Niemann: Well, it really is a split housing market. We’ve stabilized, in fact, we’re seeing a little rising employment in some of these cities. For example, Washington D.C, well, we know that. The federal government is always growing, so that’s always the mecca for housing there.
But if you take a look at Chicago, for example, the 18-34 year old population — and there are about one and a half million of these people living at home — are moving out, they’re going to where the jobs actually are. And in Chicago, you have a core that is growing because you have finance in there, trading, agriculture. But the suburbs, you still have very high unemployment, that part isn’t growing, so you really have a reverse donut hole here.
Hobson: And Juli, what about the bad here? The biggest declines came in Los Angeles and Atlanta — what’s going on in there?
Niemann: Well in Los Angeles, some of it is technology too, but it was very, very high prices from which they’ve been coming off, so you still have way high prices typical of the “sand states” still hitting L.A.
When you take a look at some of the other cities, like Detroit, housing prices are the price of a really good New York dinner, so that’s going up; it doesn’t really mean anything. So it’s very split in terms of where the new jobs are coming, and that’s where you’re going to see stabilization first.
But the core cities that have sand problems — Phoenix, Miami, Los Angeles — are still going to have those way overpriced houses that have to be worked off.
Hobson: Juli Niemann, analyst with Smith Moore and Company, thanks as always.
Niemann: You bet.