Bulletproof housing markets get hit
Posted by ecoshift on May 6, 2008
Here’s the take home quote for Humboldt: “What’s driving housing activity everywhere today is national forces,”
Once bulletproof housing markets lose some luster – May. 6, 2008
By Les Christie, CNNMoney.com staff writer
Last Updated: May 6, 2008: 11:38 AM EDT
Bulletproof housing markets get hit: The mortgage meltdown has finally gotten to Seattle, Charlotte and and other cities where prices had been holding up.
NEW YORK (CNNMoney.com) — Some of the last, best housing markets – the ones that continued to climb even as the rest of the country cratered – have turned south lately.
Seattle, Portland Ore., Charlotte, NC, and Salt Lake City all posted home price gains during 2007, even as more than half of the 150 markets tracked by the National Association of Realtors registered declines. Now they’ve joined the losers.
“What the numbers are saying is that the trend is broadening out,” said Michael Larson, a real estate analyst with Weiss Research. “[The downturn started with] the markets that had flown the highest. When the speculative bubble popped, those got hit first. These [bulletproof] markets are now getting hit for traditional economic reasons.”
they all have geography on their side…. Charlotte, which is home to the headquarters of Bank of America and Wachovia, has also seen an influx of retirees from the north who moved to Florida and then left the Sunshine State after property taxes and insurance soared in the wake of severe hurricanes. The trend is dubbed the ‘halfback’ phenomenon since the retirees are moving halfway back to where they started.
Similarly, Californians escaping the crush and the high cost of living there invaded the Pacific Northwest, according to Lennox Scott, CEO of John L. Scott Real Estate, one of the largest brokers in the area.
That migration changed Seattle, making it a destination city.
“Because of its environment, job growth and a very vibrant downtown, people now just want to live in Seattle,” said Scott, who has seen an influx of creative-class types including artists, writers and web developers.
Portland has experienced a similar phenomenon on a smaller scale; it consistently finishes high on surveys of most livable cities.
Both towns have also pursued policies of managed growth, limiting the land that can be developed, which has also helped housing prices hold up. “We don’t have the ability to expand supply easily,” said Scott, “especially in the affordable price ranges.”
Salt Lake City has fewer such restrictions, but steep growth in its population, which is up about 14% since the 2000 census, has kept housing demand high.
Now the credit crunch that has made getting a mortgage harder for everyone is hitting even the strongest markets.
“What’s driving housing activity everywhere today is national forces,” said Patrick Newport, a real estate economist with Global Insight, a consulting group. Indeed, U.S. foreclosures spiked 112% in the first three months of 2008.
But the fundamental local conditions that have helped keep these relatively strong should help them bounce back sooner than most.