Writing in The Atlantic, I argued that the economic crisis was reshaping America’s economic geography, with big city centers and mega-region hubs like New York City, talent-rich regions like greater D.C., and college towns weathering the storm relatively well, while Rustbelt cities and shallow-rooted Sunbelt economies being much harder hit.
Take a look at the graph below from the newly released SP/Case-Shiller Home Price Index for April.
Phoenix and Las Vegas have taken the biggest hits: Housing prices there have declined more than 50 percent in the past year. Miami is next, then Detroit where housing prices have sunk to mid-90s levels. San Francisco is the only significant talent region to be pummeled. Part of this is to be expected given the tremendous run-up in housing prices there, but still prices remain higher than 2000 levels. San Diego, L.A., and Tampa have all seen declines in excess of 40 percent.
Housing prices have declined less significantly in greater D.C., Chicago (hub of the great Chi-Pitts mega-region and a magnet for regional talent), Seattle (a high-tech, high human capital center), Atlanta (a talent hub for the southeast), New York, Portland, Boston, Denver – (talent hub for the Rockies), Dallas (a mega-region hub), and Charlotte (which along with Atlanta hubs the great Char-lanta mega-region). Cleveland breaks the pattern, but like Detroit its absolute housing values have fallen. Prices in greater D.C., along with Denver, Dallas, and Cleveland, were actually up in April.
The Index also tracks prices in terms of their 2000 baseline. Nationally, it’s at 140, meaning housing prices remain 40 percent higher than in 2000, more or less in line with 2003 prices. Looked at it this way, the geographic pattern could not be more striking.
Rustbelt cities have seen, by far, the biggest declines relative to 2000 prices. Detroit and Cleveland are the only two cities where housing values have slipped below 2000 values – Detroit at 69 percent and Cleveland at 98 percent.
Prices have just about fallen back to 2000 levels in Sunbelt cities like Phoenix (105), Atlanta (105), Las Vegas (112), Dallas (115) and Charlotte (118). 
Miami (145) and Tampa (140) break the pattern; their prices remain significantly above 2000 levels. My guess is that prices will continue to fall and sharply in these two markets in the coming months.
But prices in prices in Boston (146), L.A. (149), greater D.C. (167), and New York (170) remain significantly above – 50 to 70 percent above – 2000 levels. While these prices may dip some, my hunch is these markets will not be devastated and will remain substantially above 2000 levels.
The SP/Case-Shiller Index suggests that housing prices are still falling and have another 30 or more to go before they hit bottom. One thing you can be sure of, it will continue to be felt unequally across regions.
July 2nd, 2009 at 2:07 pm
The economy’s pieces are decoupled, which may not be unusual. Detroit and Portland have the nation’s highest large city unemployment rates. Both are affected by being manufacturing centers. But housing in Detroit has plummeted, median price is $6,000! Housing in Portland has held up relative well, median price is around $225,000. People are leaving Detroit but moving to Portland.
Detroit’s manufacturing is centered on the moribund auto industry which will need to be completely reorganized and repurposed before it comes back. Portland’s manufacturing is down because electronics and construction are down, but will probably rebound when those sectors come back. So Detroit may be in a depression and Portland a recession, both as part of the national/global reset.
July 2nd, 2009 at 6:36 pm
Cleveland breaks the pattern…
We’re going to be in Cleveland this summer for the first time, part of an extended family drive around vacation and so I’ve been looking at it. It’s not your typical rust belt city. Large Jewish population, Case Western, Rock & Roll Hall of Fame, Cleveland Clinic, etc. I’m guessing that there’s a significant creative class presence that maybe doesn’t show up in the studies?
July 5th, 2009 at 9:37 am
I left Miami for 2 years ago to come to Pittsburgh. The economy seems to have hit both areas; and I am still trying to decide where the situation is worse. In Miami, you had out of control housing and cost-of-living expenses. Jobs are easy to get, but may not pay well or be stable/ethical. Here in Pittsburgh, the cost of living is very low. However the job market is incredibly tight, with few openings (although the openings that are out there pay a decent wage). Also the region seems to be at a “negative growth” stage (stores closing, people leaving, suburbs deteriorating). I have been struggling with unemployment for 2 years, and I feel that it is easier to live here in Pittsburgh and be unemployed than it is in Miami. However I also wonder if I am not missing out on a lot of opportunity that may be available elsewhere throughout the country.
July 6th, 2009 at 6:49 am
That chart is very interesting. I knew that Detroit was in bad shape, and Las Vegas and Phoenix too, but it surprised me to see the sunny San Diego, San Francisco and Miami so bad. The worst thing is that this might be only the begining, even if people are tired to talk about it.
July 6th, 2009 at 8:14 am
Michael,
You bring up a good comparison of Detroit and Portland. Since you’re on the ground there in Portland, what sector do you think will employ all those (unemployed) college grads moving there? All we hear is that they are college grads, but no mention of their majors/specialty is ever made. Just curious…
July 7th, 2009 at 3:55 pm
Michael,
Portland has a more integrated relationship with its suburbs, than Detroit. The stability of home prices in Portland is a sign of sucess of the urban growth boundary. Whatever capital investments that are being made in the Portland MSA are going to be directed into the city center and adjacent areas, rather than areas on the fringes. Thus property values are more less preserved.
Detroit on the otherhand has an inverse relationship with its suburbs. For most people in Detroit’s suburbs, outside of the Red Wings, they rarley venture into Detroit. Detroit’s ‘burbs look at the decline of Detroit as their gain. For decades this worked, Detroit’s slow death was seen as a positive thing for the city’s suburbs. However I would like to see how Detroit’s suburbs are faring in the decline of the auto industry and the Michigan economy.
July 16th, 2009 at 10:49 pm
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