While the mainstream media seems to be taking to the idea that the April 2012 Case-Schiller index is showing that housing is improving, the report is a mixed-bag at best. Yes it is good news that about half of the cities in both the 10 city and 20 city composites are showing a modest 1.3% average improvement in prices in April over March of this year. And this small gain is tending to overshadow the fact that prices are still down for both composites, when compared to April of 2011.
This is hardly an improving housing market. But for years now we've been living through the worst housing market in the history of the U.S. in terms of overall value lost, so bad news that is less bad is considered an improvement. We're all ready for some good news. Even if it's just that the bad news is not quite as bad as it has been previously.
It's been pretty good news for Phoenix, Arizona, which posted the best annual gain in prices, which have risen an average of 8.6% since April of last year. Other cities that are a bit better since last year include:
Miami, FL - a city with excellent oceanside location and a temperate climate, is a market that is finally looking better after years of struggling with over-supply. Up 3.2% since 2011, Miami has recently begun to rebound as buyers from out of state and out of the country have decided that prices are finally low enough to justify buying.
It's about time. Miami and most of Florida have been in a severe downturn longer than much of the nation. After 4 major hurricanes in one season, back in 2004, Florida residents decided to pack up and head for other states that were not so hurricane prone. Between that and the fact that Florida was drastically over-built at the time, they began having major problems years ahead of the national collapse in 2008.
Dallas, TX is another metro area showing small but steady gains. This is likely due to the strong employment picture in Texas, and especially the Dallas area. Texas did not experience the big housing bubble the way that other southern states did. This was partly, (in my opinion), because Texas real estate law made it much more difficult to pursue some of the "shenanigans" that went on in the bubble states. So the strong showing here is not a surprise, and in fact, is nothing new.
Atlanta, GA continues it's "reign" at the "top of the bottom" in terms of lost property value. Metro Atlanta was the only MSA in the entire 10 or 20 city composite to post yet another double-digit loss, and is down 17% since April of 2011.
Overall Atlanta is down some 40% from it's peak highs.
Atlanta's big problems today stem from it's "advantage" during the housing boom. Lots of land and room to grow. Atlanta has the largest metropolitan area of any city in the U.S. and perhaps even the world. With a total of 13 counties, there is a lot of room to build here, and that is just what the builders did. There are literally hundreds, if not thousands of subdivisions around metro Atlanta with less than half of the homes that were intended to be built. Some subdivisions have only 4 or 5 occupied homes, surrounded by a sea of hundreds of lots that are still waiting for homes.
Georgia had no idea how dependent the state's economy was on residential construction and property taxes. When home building ground to a stop, so did much of the state's economy. Job losses and high unemployment continue to plague metro Atlanta. Foreclosures in the far flung metro counties are still running near record highs in the eastern, southern and western quadrants. The northern sector has the best of the technology and corporate employment. Though the losses have been big there too, they've rebounded faster than the other areas. In Atlanta it's all about the employment or lack of it. Some areas are great and some are not good at all.
Overall, both composite indexes still showed an average loss, though the loss is getting smaller. Let's hope this is a sign of improvement. But we already know that April 2012 job numbers looked like employment was improving, only to fall way back in May. A turn that was not expected. I hope that the downward trend in employment will not translate into more foreclosures, but we'll have to wait another month to see. Right now, the idea of an "improving" housing market definitely depends on what your definition of "improvement" is.
Donna S. Robinson is a 17 year veteran of the real estate industry, and a residential housing market analyst. She is a real estate investor as well as holding a real estate license. Her newsletter and blog are available at her website: Realty Biz Consulting.
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