Never has the mantra that all real estate is local been more true than during the recent, rumored real estate recovery.
This became clearly evident when researching five metro housing markets for a real estate broker roundtable that RealtyTrac recently hosted in Park City, Utah. The topic of the roundtable, which was broadcast live for members of the media, was whether the real estate recovery was fact or fiction, and six leading brokers from across the country participated to help answer that question for their markets.
RealtyTrac also created its first ever Housing Market Recovery Index (MRI) that quantified the strength of the real estate country in hundreds of metro areas across the country, ranking 100 of the largest metro areas based on the strength of recovery.
While the overall index was based on seven metrics impacting the real estate market, we zeroed in on home prices and foreclosure activity as the most helpful barometers for a series of local market graphs that I created for each of the markets represented by brokers participating in the roundtable. We didn’t pull data for two of the broker-represented markets, because one was added at the last minute and the other represented about 30 markets across the country.
These graphs show not only that the recovery is much stronger in some areas than others, but also that some areas don’t really need a recovery because the housing bubble never really inflated or burst in those markets.
This second revelation flies in the face of the notion that the recent housing crisis was a nationwide housing crisis. Certainly it was probably more widespread than any other previous housing slump, but some markets were largely unaffected — at least in terms of the hard home price and foreclosure activity numbers. Those markets may have been more affected psychologically in hearing about how bad it was in other parts of the country.
Among the five markets I looked at, those exhibiting the most clear boom-bust-recovery pattern over the past 10 years were the Los Angeles metro area, where
On the other end of the spectrum was Oklahoma City, a market that showed virtually no boom-bust pattern over the past 10 years — although the market still ranks high on our recovery index because it is continuing to consistently improve in terms of home prices as it has been over the past 13 years. In addition, foreclosure activity has subsided somewhat in the past year, even though the foreclosure rate here never was much of a problem even during the worst of the housing slump, according to Sheldon Detrick, CEO of Prudential Alliance Realty in Oklahoma City.
Nashville, covered by Bob Parks Realty, is similar to Oklahoma City, although there are more signs of at least a slight housing slump in this market.
New York City, on the other hand, shows a clear housing slump in the form of plummeting home prices and spiking foreclosure activity in late 2008 and early 2009, but unlike Los Angeles and Reno, this market — covered by Laffey Fine Homes International — has not yet shown strong signs of recovery. To be sure, home prices have begun to rise here, but at a much slower pace than the two Western markets. And while foreclosure activity is still below the peak back in 2009, it has begun to rebound over the past year and a half — demonstrating that the housing slump is not completely out of steam.
Markets like New York — which are repeated in places like Florida, Maryland, New Jersey, Pennsylvania, Illinois and Ohio — still have a nagging cough left over from the housing sickness of the past seven years. Meanwhile markets like Oklahoma City and Nashville never got as sick and markets like Los Angeles and Reno got very sick but are now rebounding strongly.
As a buyer, real estate investor or real estate agent, which type of market is best to be in? Below is the first segment of the broker roundtable. To view subsequent segments go to www.youtube.com/realtytrac.
