2nd wave of housing bust hits more cities
A second wave of falling home prices is battering some cities that had escaped the worst of the housing-market bust.
Prices in Seattle, Charlotte, N.C., and Portland, Ore., have hit their lowest points since peaking in 2006 and 2007. Denver and Minneapolis are nearing new lows. High unemployment and rising foreclosures are taking a toll even on markets that never overheated during the boom years.
Home values are dwindling in nearly every American market. Prices fell in November in all but one of the 20 cities in the Standard & Poor’s/Case-Shiller index released Tuesday. Eight of those markets hit their lowest point since the housing bubble burst.
The damage from the real-estate bubble has spread well beyond Las Vegas, Phoenix and Miami, which built frantically during the mid-2000s, and is sapping prices from coast to coast. In many places, prices are expected to keep falling for at least the next six months.
In Charlotte, homes are going for 2004 prices. Last year, more than half of the homes sold in surrounding Mecklenberg County were foreclosures, says Mark Vitner, a senior economist with Wells Fargo.
“There’s a huge oversupply, and a lot of people are struggling,” says Vitner, who works in Charlotte. “We’re expecting it to fall even further in 2011.”
The banking industry, which helped Charlotte boom over the past two decades and accounts for roughly one in every 11 jobs there, was hit hard during the recession. The city lost 12 percent of its financial jobs in 2008 and 2009, according to the Labor Department.
Adding to the region’s economic woes, about a third of jobs tied to the auto industry also vanished in the downturn, said Michael Walden, an economist at North Carolina State University in Raleigh. Charlotte’s unemployment rate was 12.8 percent a year ago, well above the national rate. It has fallen to 10.8 percent, still more than twice what it was when the recession started.
In Seattle and Portland, the two largest cities in the Pacific Northwest, prices peaked in the summer of 2007 and have fallen back to 2005 levels.