The Great Housing Reset Continues

By Richard Florida

U.S. housing prices are continuing to reset according to the latest Case-Shiller housing price figures.


Chart via Calculated Risk

Overall housing prices were down in November (based on a three month average that includes September and October) and eight cities -- Atlanta, Charlotte, Detroit, Las Vegas, Miami, Portland (OR), Seattle, and Tampa saw their lowest housing price levels since the 2006-07 peak. The chart below charts the declines across the 20 cities covered by the Index.

Chart via Calculated Risk.

The housing reset continues to be uneven, and the U.S. housing scene remains a tale of two housing markets. While the big news tends to be the percentage shifts in home values, there is another very interesting way to look at these figures. The Case-Shiller Index tracks housing prices based on their 2000 values.  An index score of 150 reflects a 50 percent appreciation over 2000 prices, while an index value of 80 reflects 20 percent depreciation. The index thus shows where housing values have held up and where they have declined since 2000.

Housing values have held up best in Washington D.C. -- despite losses, they are 85 percent higher (with an index value of 185) than they were in 2000.  Housing values also remain well above their 2000 levels in LA (173), NYC (170), San Diego (160), and Boston (153), and I would expect them to continue to do so based on their economies. And while housing prices have fallen somewhat in San Francisco (137), Portland (140), and Seattle (141), values remain significantly above 2000 levels in these cities. Housing markets in Dallas (115), Denver (125), Charlotte (114), Minneapolis (119), and Chicago (120) remain roughly 15 to 25 percent higher than their 2000 levels. My hunch is the housing markets in these cities have hit bottom or are close to bottom and are stabilizing.

Housing values have returned to 2000 levels in Sunbelt bubble cities like Phoenix (105) and Las Vegas (101), as well as in Atlanta (101) and Cleveland  (100) a city which did not see much appreciation to begin with. In hard-hit Detroit, housing values are roughly two-thirds (67) of what they were in 2000.

And there are a number of places where housing prices could still  have substantially further to fall.  Housing values also remain considerably above their 2000 values in two of Florida's bubble cities Miami (144) and Tampa (134), which precisely because of the extent of their bubbles are likely to still have a ways to fall.

As the Great Reset continues, it's clearer than ever that there are two distinct housing markets in the U.S. In the bubble cities and hard-hit rustbelt regions, the market has seen steep decline and may continue to weaken.  But in knowledge-driven metros, tech centers, and big, dense cities, the market has stabilized and in some cases may be starting to rebound.

This article available online at:

http://www.theatlantic.com/business/archive/2011/01/the-great-housing-reset-continues/70143/