The Poor State of Real Estate
Business, like life itself, is hard – and the thing that makes them that tough is that they are so for a variety of critical reasons, probably the most important of which is the incredible randomness involved. Nowhere has that been more true than in real estate of late, where just when it looked like things might improve, they take a turn instead towards the worse. Most major American metropolitan markets have experienced another round of fast falling prices lately owing to all the foreclosures and vacant homes still around in addition to the expiration of the federal home buyer tax credit. At the end of the third quarter this year, prices dropped in a full nine out of ten areas tracked by Standard & Poor’s Case-Shiller composite home price index.
The major cities, such as New York and Los Angeles, seem to be doing all right considering the circumstances, but lower ranked places including Cleveland, Dallas, and Phoenix are not. Prices are falling dangerously fast and dangerously low in these bellwether cities, which also include Minneapolis and Portland, Oregon. These are “middle America” communities, better reflecting purely national trends instead of a place such as New York or Los Angeles, which can count much more on international factors as well, variables such as direct investment or regularly high levels of tourism, to help power the local economy.
As a result, although authoritative industry professionals like Isaac Toussie continue to be bullish on The Big Apple, they are concerned over housing strains in the heartland. Cleveland prices fell a whole three percent in September alone, while the unemployment rate in the area is at pretty much ten out of every hundred persons. The other regional engines of Portland, Minneapolis, Phoenix, and even Dallas are all on dangerous downward trends as well, making local housing markets a buyer’s market – except sales have been flat so far.