Regional housing trends varied considerably in the US in the first quarter of 2009. In a market report in July 2009, NAR points out that the two major forces that have been having significant impact on house price dynamics are foreclosures and unemployment, either separately or combined.
Foreclosure rates have risen in all states due to the financial crisis and the economic downturn, but some states, with higher percentages of high-risk home purchase loans to financially weak borrowers, have been hit worst than others. Thus, according to data provided by the Mortgage Bankers Association and NAR Research, Florida registered the highest foreclosure rate of 10.6% in the first quarter of 2009. Also Nevada Arizona and California registered quite high foreclosure rates ranging from 5.2% to 7.8%. Wyoming, North Dakota and Alaska registered the smallest foreclosure rates of less than 1% in the first quarter.
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As a result of high foreclosures and depressed demand major metropolitan markets in Florida, Nevada, Arizona and California registered declines in median housing prices in excess of 40% from their peak as of the first quarter of 2009. The smallest price declines, ranging between 1% and 10% were registered in the major metropolitan areas of Texas, Utah, New Mexico, and Oklahoma.
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The data presented by NAR Research highlight a relationship between regional housing trends in terms of price declines and regional housing trends in terms of home sales. It seems that the severe price declines in house prices that took place in California, Florida, Arizona and Nevada played an instrumental role in boosting home sales. According to NAR data for the first quarter of 2009, home sales were significantly up in these states compared to the first quarter of 2008: 117% up in Nevada, 81% up in California, 50% up in Arizona and 25% in Florida. The only other two states where home sales were up on an annual basis were Virginia and Minnesota (both 12% higher than first quarter 2008 levels).
According to BLS and NAR Research data, the hardest hit metropolitan markets in terms of job losses were Cape Coral-Fort Myers, Reno-Sparks, Detroit-Warren-Livonia, Boise City-Nampa, Phoenix-Mesa-Scottsdale, and Toledo, which experienced annual employment declines ranging between 6.9% and 8.4%.
The NAR report points out, and we agree completely, that there are clear and significant variations in regional housing trends across US regions and states because of the differences in the nature and magnitude of forces that affected each market, as well the different market conditions that were prevailing when these forces reached each area. For this reason it is unavoidable that the different housing markets will exit the recession with different timing and different scale of price increases.
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