Not every real-estate market is struggling
In the Obama years, home values have lagged throughout the U.S., with a few exceptions.
Weston, Fla., at left, is the best-performing housing market in the country. At right, Homestead, Fla., is the worst-performing market.
Want to know how bad the real-estate market is? Just drive down almost any street in the U.S. and you’re likely to see "for sale" signs lining the road. Come back a month later and it’s a good bet the same signs will still be there — and quite possibly a few new ones, too. But while there’s a lot of housing pain, there’s also some good news. That’s because in some markets across the country, not only have home values improved, a few have even seen double-digit growth.
So where is this miracle occurring? Believe it or not, the city that has seen the biggest increase in home values is in Florida. That’s right — the state that has seen home values plummet 52.3% from 2006 peak levels. Nearly 96,000 loans were modified in Florida through August 2011 under President Barack Obama’s Making Home Affordable program. Joblessness, foreclosures and high inventory hamper recovery in nearly every corner of the state, with rare exceptions. In this case, the rare exception is Weston, a high-income city of more than 65,000 people near Fort Lauderdale where the median home value has risen 15.1% to $280,000 from February 2009 to August 2011.
A survey of the 1,000 largest cities nationwide by online real-estate marketplace Zillow for Businessweek.com identified the markets with the biggest gains and losses in home values, ranking Weston the best-performing city since Obama took office. In contrast, the U.S. median home value fell by 9.9% over the same period.
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What’s behind Weston’s success? Ines Garcia, an agent for EWM Realtors in Weston, describes the city as "Broward County’s cul-de-sac." "It’s like driving into a gated community: the landscaping, the manicuring all around the city," she says. "We were very lucky. Weston was one of the last communities to fall and one of the first to recover."
Other winners: Arlington, Mass., where the median home value increased by 14.8% since February 2009; Brookline, Mass., at 13.6%; and the D.C. suburbs of Burke, Va., at 13.5% and Vienna, Va., at 12.8%, Zillow data indicate.
Of course, the winners are far outnumbered by the losers. The worst-performing market in the survey is only 50 miles from Weston: Homestead, Fla., where the median home value dropped by 48.8% since February 2009. Rounding out the worst-performing markets: Pontiac, Mich., with a 47.4% decrease, and New Jersey capital Trenton, at 46%.
While those in depressed housing markets hope for solutions from the White House, "I don’t see how any president is responsible for the housing market in a particular area," says Steven Blitz, director and senior economist at ITG Investment Research in New York. The federal government and national housing policies have a limited impact on a local level.
The Obama administration, the inheritor of a collapsed housing market and financial crisis, has tried to help the hardest-hit housing markets through refinancing and loan modifications. Yet individual markets are influenced heavily by local conditions, such as jobs, school districts and population growth. Both the best-performing market, Weston, and the worst, Homestead, are in the Miami-Fort Lauderdale metro area, for instance. Because housing trends at their core are hyperlocal, crafting regional solutions is difficult. Developing a catch-all national policy is even more challenging.
"The foreclosure prevention efforts by the Obama administration have helped to slow the bleeding when it comes to foreclosures but have done little to help get the housing market off life support," says Daren Blomquist, a spokesman for RealtyTrac.
- 'Listed': Home prices remain flat
To stimulate buying, the housing industry has called on the federal government and lending institutions to facilitate mortgages to qualified homebuyers. Rather than address housing specifically, says Jeffrey Lubell, executive director of the Center for Housing Policy, a research group in Washington, "the single most important thing that needs to be done now is get the economy back on track. Nothing can help housing more than putting people back to work." The U.S. unemployment rate stood at 9.1% in September, according to the U.S. Bureau of Labor Statistics.
Job creation in the D.C. area, for example — driven by the government — helped nine cities in the capital region rise to the list of top 25 housing markets in Zillow’s research. The unemployment rate in the D.C. metro area was 6.2% in August, the Bureau of Labor Statistics estimates.
"Housing will rise with jobs and income. Anything that improves confidence in the future trajectory of jobs and income will raise the arc of growth for housing," Blitz says.
One metro, many markets
Weston, following patterns in the rest of the country, saw the median home value peak in 2006 at $478,000 before plunging. The median value bottomed out in May 2009 at $235,600, according to the Zillow Home Value Index, and has since climbed steadily.
By August 2011, the unemployment rate in Weston was down to 7% from a peak of 8.3%. The median home value had risen to $280,000, well below the peak. Still, among cities it was the best housing rebound in the last two-and-a-half years. The foreclosure rate in September, about one in 338 housing units, remains far above the U.S. rate, though it is down 60.7% from a year earlier, RealtyTrac data show.
Helping this meticulously landscaped planned community — which offers bike trails, golf courses, scenic lakes, highly ranked schools, a low crime rate and active homeowners associations — was a rebound in demand from young families, says Susan Penn, an agent at EWM Realtors. The median household income is $78,030.
Weston also experienced an influx of middle- and upper-class immigrants from Venezuela and other parts of South America. The U.S. Census Bureau estimates the city’s foreign-born population increased to 43.9% in 2010 from 37.1% in 2006.
As Weston recovered some housing value, Homestead was less fortunate. A Miami suburb and agricultural area with an Air Reserve base, Homestead has struggled since being devastated by Hurricane Andrew in 1992. It has a poverty rate of 29.4% and median household income is $36,279 (lower than both the Florida and U.S. medians), according to 2009 census data.
Lower-income areas and exurbs were generally hit harder by the recession. In Homestead, unemployment skyrocketed to 11.7% in August from 6.3% in February 2009, the BLS estimates. By August, the foreclosure rate remained high at one in 125 housing units and the median home value was 66.7% below peak at $76,600.
According to Zillow senior economist Svenja Gudell, under current conditions, the median U.S. home value will likely fall an additional 3% to 5% and not hit bottom until 2012 at the earliest. "We need to identify creative solutions," such as repurposing foreclosed homes as rental housing, refinancing loans and loosening credit, which involves many players, says Lubell of the Center for Housing Policy.