The Race to Recovery: Which Markets Will Win?
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Make no mistake: Some local home building markets will recover before others. To get a better handle on it, we recently polled five housing experts and asked them to pick the five markets that might recover first. I think you'll enjoy seeing which markets they chose.
While some selections were predictable--Washington, D.C. and Dallas made several of the lists--others were surprising. Two analysts singled out San Diego, largely because the downturn has pounded pricing to the bottom there but also because it's a ghost town--many of the major builders have moved on. Sacramento came up on the radar of analysts because it led the way down and, the thinking goes, may lead it back up.
The experts tended to focus on markets that have fared better than others during the downturn. Cities in Texas and the Carolinas made some lists because home prices didn't dramatically over-inflate during the boom. Several states were earmarked that have benefited in recent years from strength in the energy and agricultural sectors. We analyzed several of these markets in an earlier story on the healthiest markets for 2009.
Not surprisingly, no one dared to pick markets in Florida, which can lay claim to more than its share of the weakest markets in the country. Several Florida markets also showed up on a list by Moody's economy.com of markets that will be the last to recover. The weakest markets will be hounded by rising foreclosures that will drive down home prices, destabilizing the home building market.
Meanwhile, a steady stream of reports are coming in from markets around the country about a budding recovery. Every day, we post several on Builder Online in the Recovery Watch section. Today we have a story from the Orlando Sentinel about first-time buyers and investors jumping into the market. Yesterday, we ran a piece from the Kansas City Star about how that market is slowly building toward recovery.
After today's announcement that starts dropped 10 percent in March, which followed yesterday's announcement that builder confidence rose strongly, it's pretty clear that this road to recovery will be a bumpy one. Even some of the best-performing markets will no doubt receive shock treatment from national economic trends. Some of the major banks, for instance, have ended their foreclosure moratoriums and are picking up activity once again. And the news on the employment front is not good.
It will also be difficult to separate signs of a fundamental housing recovery from the pickup we have every spring.
Seeing any signs of recovery in your market?