State of Individual Real Estate Markets

Everybody is well aware of the hit that the real estate markets took in 2007-2008 continues to negatively affect them in 2010. The economic fallout has been tremendous on both the micro and macro scale. Artificially over-valued housing backed mortgage assets, funneled through brokerage houses, threatened to take down Wall Street. It was another major financial crisis that was top-down and bailed out by the public. Nonetheless, now we are dealing with the fallout of this market collapse, and it is not pretty. The economy has not yet recovered to anywhere near previous levels and overall unemployment is still very high. However, it should be noted that different individual housing markets have seen very different effects on their real estate markets.

Not surprisingly, five of the seven worst housing markets since the onset of the Great Recession have been in Florida. All five of these have seen housing prices fall by at least 20%, with Miami being the worst at over 40%. It was in Florida where the housing bubble was most pronounced. Houses that amounted to little more than one bedroom/one bathroom shacks were selling for upper six figures thanks completely to location. With the benefit of hindsight, it was ridiculous the prices that some people were willing to pay that led to these inflated home values. As such, it is highly unlikely that the prices will return to their 2006 values any time soon. Even a terrific economic recovery would likely be accompanied by some spending sanity that would prevent values from bubbling to the pre-recession peaks.

However, things are not bad in all real-estate markets. Individual pockets have actually managed to see housing prices increase by 10-20% since the recession hit. Most of the best performing markets have been in Midwestern states (i.e. Ohio) where the bubble never grew to the proportions that it did along the coasts. Unfortunately, while their stability may have saved Midwesterners from huge drops in the housing markets, they still fell victim to the economic pitfalls (i.e. inflation) that plagued the rest of the nation on the macro scale. Regardless, it is plain to see that as connected as we all are in this day and age, individual areas do behave differently than others, especially with real estate.

Overall, most of the country is beginning to see a leveling of prices, such as they are. Areas like Greensboro, North Carolina have seen prices stay very steady for most of 2010, with the market favoring the buyer slightly. At the end of the bad day, that may not be such a bad thing. As a nation, our economy can adjust to housing prices at almost any level. But we need some sanity to be involved in the process. Volatility is the real evil and if housing begins to fluctuate up or down by great degrees again, then we will be in trouble. However, that does not seem to be on the horizon anytime soon and our best task is to continue pulling ourselves up by our bootstraps and rebuild.

Update 2014: The economy has not improved although statistics have been manipulated to make some think so.  Theories abound, are we going through a 40 year "reset" that will forever change the landscape of our economy driven by a powerful few, or is the country simply being moved in a direction that makes it impossible to see an economic recovery?  For appraisers it's not that complicated real estate markets are micro-economic in nature and they either improve or they do not.  As of 2014 in Las Vegas the markets are still struggling not booming. 

For more appraisal information contact Glenn Rigdon, MA, MRICS, ASA a Las Vegas / Henderson Nevada appraiser via email or via his business website Horizon Village Appraisal (http://www.horizonvillageappraisal.com), or you can also click on “Contact Us” on the home page of this website.   

Article source: http://www.appraisalarticles.com/Real-Estate/2694-State-of-Individual-Real-Estate-Markets.html