"The Charlotte By The Lake Tea
Charlotte bucks housing trend
Home values grew while other cities saw declines
J.W. ELPHINSTONE
Associated Press
Housing prices in Charlotte and Seattle enjoyed the biggest gains over the last year, according to data released Tuesday, rare good news from a sector widely battered elsewhere in the country by foreclosures and swooning home valuations.
In a Standard & Poor's index measuring housing prices in 20 metropolitan areas, only five cities gained ground.
Charlotte and Seattle tied with an increase of 4.7 percent compared with the same time last year. However, S&P data showed the pace of that increase was slowing.
Atlanta (0.4 percent), Dallas (0.2 percent) and Portland, Ore., (2.2 percent) rounded out the winners.
Overall, U.S. home prices fell 4.5 percent in the third quarter from a year earlier, the sharpest drop since S&P began its nationwide housing index in 1987 and another sign that the housing slump is far from over, the research group said.
One of the index's creators also predicted a significant chance of a recession as the economy contends with falling housing prices, spiking foreclosures and turmoil in the financial markets.
"Over 50 percent," said MacroMarkets LLC Chief Economist Robert Shiller, giving his odds for a recession. Other economists have put the chance of recession at one in three.
"We're in the aftermath of the biggest housing boom in history, so how do we use historical data to judge the outcome?" he said. "We're out of the range of the normal variation in the data and I take that as very significant."
The S&P/Case-Shiller quarterly index tracks prices of existing single-family homes across the nation compared with a year earlier.
The index also showed that prices fell 1.7 percent from the previous three-month period, the largest quarter-to-quarter decline in the index's history.
After 13 years of rising home values -- with the greatest increases occurring in the first part of this decade -- the housing market has started to unravel.
Declines in housing prices have kept homeowners, especially those with riskier mortgages and spotty credit, from refinancing, sending them into default and foreclosure at a quickening pace. More foreclosed properties have added to an already ballooning inventory of homes on the market, further depressing values.
Investors holding securities backed by mortgages have taken billions of dollars in losses as they rewrite the value of defaulting assets. Spooked, they have stopped funding mortgages, hurting lenders' ability to issue new loans and shrinking demand.
The Federal Reserve has stepped in, cutting interest rates two consecutive times -- once by a half-point in September and by a quarter-point in October -- to 4.5 percent to encourage economic expansion. The Fed said last week it expects the housing slump and credit crisis to slow economic growth and push unemployment up slightly next year.
Tampa and Miami led the index with the biggest year-over-year declines at 11.1 percent and 10 percent, respectively. It also showed drops in San Diego of 9.6 percent; Detroit, 9.6 percent; Las Vegas, 9 percent; Phoenix, 8.8 percent; and Los Angeles, 7 percent.
The S&P's 10-area index decreased 5.5 percent in September from the previous year.
On Thursday, the Washington-based Office of Federal Housing Enterprise Oversight is to release its third-quarter index of U.S. home prices.
s high overall cost of living are possible explanations."
Larger, more expensive cities like New York and Los Angeles have been hemorrhaging people since 2000, losing 1.4 million and 937,000 citizens, respectively. However, those statistics are not always perfect indicators of the economic effects migration has on a city. If residents of Texas move to an outer suburb, they're still counted as being in the Dallas metro. Leave Los Angeles, and you're in the San Bernardino metro area.
"Large, fast-growing cities like Los Angeles suddenly decant population out to smaller cities inland," says Robert Bruegmann, a professor of architecture and urban planning at the University of Illinois. While Los Angeles has experienced out-migration, the bordering Riverside-San Bernardino metro absorbed the nation's largest amount of domestic migrants. "[In larger cities] the effect of domestic out-migration has been masked to a certain extent by immigration," Bruegmann says.
New York, for example, has added just over 1 million immigrants since 2000 to cover for what would otherwise have been a population decline. In the annual State Department green-card lottery that awards permanent-resident status to prospective immigrants via random drawing, New York's government is very proactive in seeking out new immigrants and becomes home for 12 percent of lottery winners.
Economic stability in any market depends on growth, something cities are acutely aware of when it comes to augmenting their population.
"The challenge is certainly more demanding in places like Buffalo or Pittsburgh, which on a metro level are shrinking but are spreading out," says Robert Puentes, a fellow at the Brookings Institution. He adds that cities depend on growth. "When the metro is thinning out, that's very detrimental to the city."
