Charlotte, NC, Salt Lake City, Seattle and Portland Ore. 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. But now it's looking bad for everyone.
The markets that were first and hardest were the ones who had seen the biggest boom prior, whose prices were unbelievably inflated and therefore had nowhere to go but down. The solid markets who caught the tail end of the boom but much less severe are feeling the downturn effects but for the normal economic reasons.
In Charlotte, prices have fallen about 3.4%, through February, from their August, 2007 peak, according to the S&P Case/Shiller Home Price Index.
Seattle recorded a loss of 6.5% from its July peak ,and Portland prices dropped about 5% during the same period. Salt Lake City saw a decline of about 7% in the fourth quarter of 2007, compared to the third quarter.
These areas actually remained affordable for most residents despite years of price appreciation. For example, the median home price in Seattle was $370,000 in February. And about a quarter of all homes sold there during the last three months of 2007 were affordable to families earning the area's median household income of nearly $76,000, according to the Housing Opportunity Index from Wells Fargo and the National Association of Home Builders.
In Portland 28.8% of homes sold were affordable in the last quarter of last year; in Salt Lake City the figure was 35.4% and in Charlotte it was 62.9%. Compare that with Miami, where only 13% of homes sold were affordable for most people, or San Francisco where only 7.9% of homes fell into that category.
It is not just because our prices never reach crazy, high levels but individual economies play a huge role too. In Seattle, software and aerospace jobs have kept things humming, while high-tech and telecom have done the same for Portland, and banking and tech companies have boosted Charlotte.
Geography is on their side as well. 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 after property taxes and insurance soared in the wake of severe hurricanes.
Similarly, Californians escaping the high cost of living headed up to the Pacific Northwest. Seattle has massive numbers of people moving there daily for it's vibrant downtown. Lots of creative artist, writers and web developer types moving north. Portland is experiencing a similar situation on a smaller scale. We show up on a lot of livable city surveys.
Both towns have also pursued policies of managed growth, limiting the land that can be developed, which has also helped housing prices hold up.
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.It is very discouraging news to hear that we will have to suffer like the rest, but the upside is that we are likely to recover more quickly than others so comparatively, it won't last too long.
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