April 22, 2011
Major U.S. cities show population declines
According to a recent article in USA Today, in the past ten years most of America’s largest cities either grew more slowly or lost people at a faster rate.
The article provides information from an analysis of 2010 Census data by University of Nevada Las Vegas urban studies professor Robert Lang. Lang’s analysis believes a decline in immigration and the recession contributed to slower growth in cities over the past decade.
The data shows that some cities saw blacks relocating to the suburbs, even as cities attracted young professionals and empty-nesters. Washington, D.C., for instance, saw its population grow 5.2 percent despite a loss of black residents.
Lang’s research shows:
- Philadelphia was the city in the study that reversed a decline in the 1990s. Cities that lost in the 2000s included Chicago, Baltimore and Detroit.
- Phoenix dropped from 34.3% growth one decade to 9.4% the next; Dallas from 18% to 0.8%; Los Angeles from 6% to 2.6%. The nation as a whole grew 9.7%, down from 13.2% in the 1990s.
- Urban centers of the 50 largest metropolitan areas collectively gained 3.7% in the 1990s but declined 1.3% from 2000 to 2010.
- Four of 35 cities that study had identified as rebounding in the 1990s had their worst decade since their postwar declines began: Birmingham, Ala.; Detroit, Toledo, Ohio; and New Orleans (lost more than 140,000 people, many after Hurricane Katrina devastated the city).
The following table shows ffourteen of the 15 most populous cities that grew more slowly in the past decade than in the 1990s or lost population (sorted by growth rate in the 2000s):
|City||2010 Population||1990s Growth Rate||2000s Growth Rate|
Six Cities with Steep Housing Discounts
CNNMoney.com recently offered a list of a few cities that have had the steepest price drops over the past six months.
Here are six cities that are offering some of the biggest discounts on housing:
Rising foreclosures have hit the Atlanta housing market hard: Foreclosure filings in 2010 rose 22 percent after jumping more than 40 percent the year before. The last six months of 2010 housing prices dropped about 6 percent. Homes in Atlanta typically average 65 days on the market before getting a price cut, according to Trulia.
Seattle’s housing market at first seemed immune to the housing slump compared to other West coast cities. But after hitting a price high in May 2007, prices started headed down and have dropped 5.2 percent in the past six months alone. Seattle housing prices are 28 percent off their peak. Homes in Seattle spend an average of 54 days on the market before getting the first price cut, which is about 6 percent, according to Trulia. With hiring picking up at some of Seattle’s major companies, like Boeing and Amazon, analysts are forecasting a rebound in the Seattle real estate market.
Despite only seeing moderate gains during the housing boom, Minneapolis has still felt the housing slump like other markets. Since peaking in April 2006, housing values in Minneapolis have dropped 34 percent–8 percent of that loss alone has come over the last six months. Homes in Minneapolis spend an average of 45 days on the market before getting the first price cut, which averages about 9 percent, according to Trulia.
With a population drop in the last decade of 25 percent, Detroit’s economic and housing woes are nothing new. However, the auto industry has stabilized, which is offering a hopeful sign to the city’s housing market.
Arizona’s largest city went through one of the most volatile housing market cycles in the country as prices there more than doubled between January 2000 and the top of the market in May 2006. Since then, prices have dropped back to their early-2000 levels, according to the S&P/Case-Shiller index.
Many expect to see more bargain prices in the area as Fannie Mae and Freddie Mac sell off their repossessions in bulk to investors.
Florida has been in the central ring for the whole housing circus. Prices here are off a total of 46% from peak. According to Trulia, sellers have not been particularly quick to drop their listing prices, lasting an average of 69 days before the first reduction.
Florida’s Existing Home and Condo Sales Up
According to the latest housing data released by Florida Realtors, Florida’s existing home and existing condo sales rose in March. Existing home sales increased 12 percent last month with a total of 18,522 homes sold statewide compared to 16,540 homes sold in March 2010. Statewide sales of existing condos last month rose 24 percent compared to the year-ago sales figure.
Seventeen of Florida’s metropolitan statistical areas (MSAs) reported higher existing home and existing condo sales in March; 17 MSAs also had higher condo sales. This is the fourth consecutive month of higher year-over-year existing home and existing condo sales statewide.
Florida’s median sales price for existing homes last month was $126,300; a year ago, it was $136,000 for a 7 percent decrease. Sales of foreclosures and other distressed properties continue to distort the median price downward because they generally sell at a discount relative to traditional homes.
The national median sales price for existing single-family homes in February 2011 was $157,000, down 4.2 percent from a year ago. In California, the statewide median resales price was $271,320 in February; in Massachusetts, it was $270,000; in New York, it was $245,000; and in Maryland, it was $208,258.
In Florida’s year-to-year comparison for condos, 9,703 units sold statewide last month compared to 7,830 units in March 2010 for an increase of 24 percent. The statewide existing condo median sales price last month was $84,300; in March 2010 it was $94,800 for an 11 percent decrease. The national median existing condo sales price was $150,400 in February 2011.
Sarasota Real Estate Rising Like the Tide
According to an article written by Sandy Winslow, the city of Sarasota, Florida is one of the most desirable pieces of any land in the United States due to its location on the Gulf of Mexico.
Her opinion is that coastal property has the greatest potential because of the relative scarcity versus other forms of real estate plus the overwhelming desire for people to live close to water.
The location of Sarasota is particularly appealing because the gulf side of Florida enjoys more temperate weather and the waters are generally warmer than the Atlantic side. The beaches also are considered more pleasant than those on the ocean side. This is due to the more gentle surf and whiter, finer sand that are found on the shores of the Gulf of Mexico.
Sarasota’s shoreline, as well as other areas on the West and East coast of Florida is protected by a line of barrier islands. These “keys” make up the western side of Sarasota Bay. The barrier islands adds to the protection and stability of the coastline allowing for greater use of the waterways.
Sarasota real estate is enjoying resurgence as the country emerges from its latest economic downturn.
The author believes the rebound in Sarasota (and Florida in general) will be quicker than most other areas of the country as things begin to turn around. Shifting demographics will also play a large role in the popularity of the area as more Americans are reaching retirement age and have the resources to invest in real estate for their primary or secondary living options.
Posted by Scott R. Lodde
April 18, 2011
Florida Leads Nation in Potential Job Growth
According to a recent report by Wells Fargo, Florida is No. 1 in potential job growth once the state shakes off lingering effects from the recession.
The study looked at regional competitiveness, the factors that might lead employers to create jobs locally. To compile results, Wells Fargo analyzed 20 years of employment data and growth trends. It then projected future growth. While an expected boost in tourism post-recession played a part in Florida’s ranking, Wells Fargo also cited an expanded diversity in the state’s job market, such as the Scripps Research facility in Palm Beach County.
The study found Florida competitive in 22 industries. Georgia – No. 2 on the list – had 21. Wells Fargo considered traditionally white-collar industries as Florida strengths, including professional services, insurance and finance.
Here are the top ten states with a positive regional advantage in more than 17 industries:
Two Florida Cities Set for Dramatic Turnaround
Kiplinger.com recently named two Florida cities, Jacksonville and Orlando to its list of 11 comeback cities in 2011. According to the website, 2011 will see a “dramatic turnaround meaning new investment by businesses, growth in the number of jobs and a reblooming of hope” in the noted cities.
The website did not list the cities in any particular order.
Kiplinger predicts that Orlando employment will increase by 3 percent this year. It points to an improvement in tourism for the vacation destination, but also points to the growth of a “life science cluster of medical care and research.”
Kiplinger expects job growth of 2.8 percent this year. It points to increased demand from financial service firms, hotels, health care, restaurants and warehousing.
Other cities in the top 11 for a turnaround include:
- Charlotte, N.C.
- Chattanooga, Tenn.
- Flint, Mich.
- Las Vegas
- Nashville, Tenn.
- Portland, Ore.
- San Jose, Calif.
Florida’s massive ‘shadow inventory’ of homes
A recent study conducted by National Association of Realtors research economist Selma Hepp examines the volume of homes in limbo, the so-called “shadow inventory”.
Shadow inventory is generally described as the number of homes in bank inventory waiting to be sold plus the homes in that have been foreclosed but for a variety of reasons (redemption periods, marketing or legal reasons) are being held off the market and homes where the mortgages are delinquent and are likely to eventually be foreclosed. The shadow inventory is considered to be a marker for how long it will take for a depressed housing market to return to normal.
Florida’s so-called “shadow inventory” is LARGE and according to the NAR study the state ranks No. 1 in the nation with 441,461 shadow homes.
California — twice the population as Florida — is in second place with 227,961 homes, followed by Illinois (121,226), New York (107,485), and Texas (93,761).
The issue in Florida, Hepp says, stems largely from the sheer size of the foreclosure inventory and the lengthy time it takes for delinquencies to reach foreclosure. In contrast, states like Nevada and Arizona rank in the top three states for foreclosures but are 16th and 11th in shadow inventory because their inventory is moving faster through the pipelines and makes up a larger share (55 percent in Arizona and almost 70 percent in Nevada) of all home sales.
The volume of shadow inventory is less of a problem than the length of time it will take before those homes are cleared.
The NAR study has a silver lining since it is not Florida that will take the longest to rid itself of this overhang. In that category is New Jersey, which may need as long as 51 months — more than four years to rid itself of its inventory.
Posted by Scott R. Lodde
April 11, 2011
Great Places to Retire
Forbes recently published their annual list of the best places to retire. While Forbes’ list takes into account numerous factors in choosing its “best retirement places,” this year it focused more on tax burden and cost-of-living.
The 16 best retirement areas (listed alphabetically) are:
- Albuquerque, NM
- Charleston, SC
- Charlotte, NC
- Colorado Springs, CO
- Fargo, ND
- Indianapolis, IN
- Jacksonville, FL
- Kansas City, MO
- Lexington, KY
- Nashville, TN
- Omaha, NE
- Pittsburgh, PA
- Portland, OR
- Salt Lake City, UT
- San Antonio, TX
- Tucson, AZ
Among the more affordable retiree cities that made the “best retirement places” list for 2011 are (listed in no particular order):
- Indianapolis: Very affordable housing.
- Fargo, N.D.: Lowest crime rate on the list and inexpensive living costs.
- Charlotte, N.C.: Affordable housing as well as cost of living.
- Charleston, S.C.: Lowest taxes of all the cities Forbes evaluated.
- Colorado Springs, Colo.: Affordable housing and low cost of living.
- Jacksonville, Fla.: No state income or estate tax.
- Pittsburgh: Tax breaks for retirees.
Why Florida’s unemployment rate is so much higher than national average
According to an article in the St. Petersburg Times, Florida’s unemployment remains stubbornly above the national average.
Although the State’s jobless rate recently fell to 11.5 percent, Florida is still tracking 2.6 percentage points higher than the national average.
In its recent State of the States report, Wells Fargo Securities cited 10 states that had both weak economic fundamentals and had undergone a severe recession. Three of them – Nevada, Rhode Island and Florida were singled out as “likely to have the most protracted economic recoveries.”
Here are some of the big reasons the State will continue to lag behind the rest of the nation:
- The biggest albatross for the state has been the housing bust and related implosion of the construction industry but as the article points out, it’s not the only economic drag.
Since the start of the “Great Recession”, the state has shed 350,000 construction jobs, cutting the industry by more than half. The industry added 3,600 jobs in February, but it’s still down 15,200 jobs since just last year.
And those jobs are NOT coming back anytime soon as the median price of a newly built home nationally ($230,600) is now 48 percent higher than that of an existing home being resold ($156,100).
- While the manufacturing industry is rebounding (automobiles, durable goods, electronics, and business equipment), Florida isn’t invited to the party.
According to Hank Fishkind, a central Florida economist and head of Fishkind & Associates, most of Florida’s manufacturing is related to the housing industry — concrete blocks, door frames, milling, etc, and the State’s manufacturing is not going to recover until housing recovers.
- Most of the newly created jobs in Florida pay lower average wages. And lower wages equals less disposable income.
- The end of the space shuttle program has been a big slap for Florida’s Space Coast. Eventually, most of the 9,000 workers connected to the Space Coast will need to find new jobs, putting a huge damper on Brevard County’s economy.
- Florida is a State dominated by small businesses, claiming relatively few Fortune 500s for a state with nearly 19 million residents.
- Florida’s tourism industry will take a hit from rising gas prices tied to turmoil in the Middle East.
- With no personal income tax, Florida relies on property tax revenues to prop up its budget and the State wants to eliminate 7 percent of the state’s government jobs, laying off about 6,700 state workers, to make the numbers work.
- Much of Florida’s unemployment is tied to those who worked in professions or trades that are being phased out or offshored and not expected to return – like certain manufacturing jobs made obsolete by technology.
Florida has felt the impact of call center jobs that were offshored to cheaper labor and are unlikely to return.
Naples Rises as Wealthy Buyers Return to Market
According to a recent article at Bloomberg.com more and more buyers are “finally getting off the fence” for a second home in the state’s affluent vacation areas.
For example, sales in the Naples area last year rose 10 percent, the first annual increase in at least five years, while the median price for homes listed at $300,000 or more gained 4 percent to $544,000, according to data compiled by the Naples Area Board of Realtors.
About half of the properties in the Naples market are second homes, and discounts from 2006 peak prices average about 25 percent.
Some economists this is a case of a “flight to quality” as the good places pick up first.
Other resort towns are starting to follow the lead of Naples as real estate on Florida’s Atlantic coast (Boca Raton, Jupiter and West Palm Beach) rose 32 percent for existing houses and 40 percent for condos in February from a year earlier.
Many realtors cite rising stock prices and the decision not to increase tax rates in 2011 as contributors to the surge in deals. Also, record cold temperatures in parts of the Midwest and Northeast this winter have nudged people to make real estate purchases.
Home values in South Florida markets may show a “surprise upward” trend while U.S. prices remain flat.
The article also cites international buyers seeking ways to protect their wealth with U.S. hard assets as a factor. Florida properties accounted for 22 percent of all purchases made by buyers from outside the U.S. in the 12 months ended in April.
Florida’s ranking of foreclosure filings per household fell to eighth among states in February from second in September last year although the State is ranked second in the number of filings sent to property owners with 18,760.
Posted by Scott R. Lodde
April 4, 2011
Housing shortage on the horizon?
According to a new study published by Metrostudy and reported in an article by CNNMoney.com, a housing shortage is looming that will soon create a huge surge in demand for new homes and now is the time to buy.
In the 41 cities Metrostudy covers, 78,000 houses are either vacant and for sale, or under construction – that is less than a quarter of the new homes that fell in that category during the housing boom in 2006 and way below the level of a decade ago.
According to the article, if we had anything like normal levels of buying, those houses would sell in 2½ months which indicates an incredible shortage.
According to an executive at Metrostudy, the historic drop in new construction mixed with the decline in housing prices is laying the foundation for a dramatic recovery in residential real estate. The company expects that homeowners soon will start buying again, which will drive up prices in many markets later this year.
Two basic factors are laying the foundation for dramatic recovery in residential real estate. The first is the historic drop in new construction. The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets.
One of the major factors that will bring buyers back to the market is the affordability issue. A new study by Deutsche Bank measures affordability in two ways: first, the share of income Americans are paying to own a home. And second, the cost of owning vs. renting. On the first metric, Deutsche Bank finds that homeowners now pay just 9.8% of their income in after-tax mortgage, tax, and insurance payments. That’s down from 17.2% at the bubble’s peak in 2007, and by far the lowest number in the Deutsche Bank database, going back to 1999.
The second measure, the cost of owning compared with renting, should also inspire potential buyers. In 28 out of 54 major markets, it’s now cheaper to pay a mortgage and other major costs than to rent the same house. What’s most compelling is that in all of the distressed markets, owning now wins by a wide margin — a stunning reversal from four years ago.
It now costs 34% less than renting in Atlanta. In Miami the average rent is now $1,031 a month; vs. the $856 it costs to carry a ranch house or stucco cottage as an owner.
In another report, Deutsche Bank identified 10 cities with the most affordable homes:
|Rent as % of after tax mortgage payment||Median home price change 2006-2010|
|Tampa-St. Petersburg, FL||131.6%||-41.4%|
|Las Vegas, NV||125.1%||-56.5%|
|St. Louis, MO||123.0%||-11.7%|
Young and educated show preference for urban living
According to a recent article in USA Today, educated 20- and 30-somethings are flocking to live downtown in the USA’s largest cities, even urban centers that are losing population.
In more than two-thirds of the nation’s 51 largest cities, the young, college-educated population in the past decade grew twice as fast within three miles of the urban center as in the rest of the metropolitan area up an average 26 percent compared with 13 percent in other parts.
The article points to a new generation of Americans that are looking for different kinds of lifestyles – walkable, art, culture, entertainment.
In Cleveland, which lost 17 percent of its population, downtown added 1,300 college-educated people ages 25 to 34, up 49 percent.
In Detroit, three anchor institutions; Wayne State University, Henry Ford Health System, and the Detroit Medical Center recently launched “15 by 15,” a campaign to bring 15,000 young, educated people to the downtown area by 2015.
Among the lures are cash incentives: a $25,000 forgivable loan to buy (need to stay at least five years) downtown or $3,500 on a two-year lease.
Preference for urban living among young adults, especially the well-educated has increased sharply, data show:
• In 2000, young adults with a four-year degree were about 61 percent more likely to live in close-in urban neighborhoods than their less-educated counterparts. Now, they are about 94 percent more likely.
• In five metropolitan areas – Boston, Chicago, New York, San Francisco, Washington about two-thirds of young adults who live in the city center have at least a four-year college degree. Less than a third of the nation’s 25- to 34-year-olds do.
The following table indicates the gain from 2000 to 2009 in 25- to 34-year-olds who have a four-year degree or higher and live within 3 miles of a metro area’s central business district. The data is from the 2000 Census and 2005-2009 American Community Survey by Impresa for CEOs for Cities.
|Metro area||Gain||Percent change|
|Kansas City, Mo.-Kan.||1,300.3||50%|
|Salt Lake City||1,903.0||21%|
Posted by Scott R. Lodde