The Midwest and its worst performer for the fourth quarter – Detroit – have been the subject of much scrutiny this week over a controversial Super Bowl commercial featuring film icon Clint Eastwood.
Depending on your point of view, the commercial either was an uplifting reminder of America’s resilience or a cheap political ad for politicians who might benefit from Detroit’s perceived economic recovery (see: the current administration). As the debate chugs along, one point is clear: Detroit’s housing story is neither one of shiny resilience nor a story any self-respecting politician would want to take with him or her on the campaign trail.
The numbers come from the Truckee, Calif.-based real estate analytics firm Clear Capital. The company’s fourth-quarter U.S. real estate market analysis takes a snapshot of the health of the nation’s housing sector with data covering up to the end of January. Here are some highlights:
- Year-over-year home prices for the U.S. overall lost 2.6% through January.
- Quarter-over-quarter home prices for the U.S. declined 1.6%.
- The Midwest lost its momentum and led the nation in quarterly losses.
- The remaining regions had little change quarter-over-quarter and year-over-year.
Clear Capital notes that the housing market may actually be bottoming out, but could fall right through the floor to see new losses if certain economic issues don’t go the housing market’s way.
“Although prices at the national level continue to slide due to pressure from the Midwest, the lower-priced segments of several specific markets are bucking the trend and seeing appreciation, suggesting that recoveries could be occurring from the bottom up,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital, in a statement. “[But] when we look at the strength in the bottom tier of prices, the volatility within the metro markets, the rapid changes in direction with certain regions and relative stability in others, these factors underscore the economic and market fragility that remains a dark cloud over housing prices.”
Detroit is ranked first among those volatile metro markets, losing 15.5% on a quarter-to-quarter basis from 2010 to 2011. The city’s losses for the entire year of 2011 totaled -11.9%, well ahead of the second-worst performing U.S. housing market, Milwaukee. Beside the 15.5% quarterly price decline, Detroit has also seen a significant “increase in distress sales,” Clear Capital says.
With Detroit and Milwaukee, to an extent, leading a downward trend, overall housing prices fell 4% in the Midwest for the quarter (and 5.2% on a year-to-year basis), even as the rest of the nation saw incremental gains on the positive side of the ledger.
Any more of a decline in Detroit and the surrounding metropolitan areas could crimp the entire U.S. housing market, which has one operative term to describe it right now – fragile.
In that regard, it’s not halftime in Detroit – it’s fourth and long. And the rest of the nation may want to see if the city can pull off a Hail Mary and put some points back on the board.
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