Tuesday, August 19, 2008

Stunning Real Estate Map

Don't worry about the details, but it's important to note that the blue diamonds represent year over year price declines of more than 20%. California has a number of regions down over 30% year-over-year and Florida is really ugly as well.

Some of their key observations:
- 29% of homes purchased in the last 5 years have negative equity (ie, the mortgage exceeds the value of the house).

- Foreclosed homes account for 50% of all home sales in some markets

- Home values are now falling in 85% of the country

"Nationwide, nearly one in four (23.7%) homes sold during the past year sold for a loss while nearly 15 percent of sales were foreclosures(5). In parts of California, more than 60 percent of homes sold in the past year were for a loss while homes sold in foreclosure exceeded 50 percent.

In New York- Northern New Jersey-Long Island MSA, which has the lowest rates of foreclosure among the markets monitored by Zillow, the percentage of homes sold for a loss since the second quarter 2007 is 8.8 percent and the percent of homes that sold in foreclosure is 3 percent.

In many markets, the rate of these Distress Signals is two to three times what was reported just a year ago. For example, 32.7 percent of homes sold in the second quarter were sold for a loss and 18.6 percent were foreclosure sales compared to the year-ago quarter when the rates were 12.2 percent and 7 percent respectively. In the San Francisco-Oakland-Fremont MSA, for example, nearly half (48%) of all homes sold in the second quarter recorded a loss while 34.3 percent were foreclosed; however, just a year ago, the rates were 14.9 percent and 10.7 percent respectively."

So what does this mean for Northern NY? Well, we continue to be an outlier. We didn't participate fully in the real estate boom and we're not experience the great pain --- yet. I've long argued that the high percentage of employment tied to public service (Ft. Drum, education, prisons, Border Patrol, Law enforcement) and the relatively small private sector in NNY means that we follow the state and federal budget patterns more closely than the private sector economy. However, they are very closely linked. As tax revenues fall, payrolls in the public sector will shrink and this will have a dramatic effect on our local economy in 2009 and 2010. So, despite our current stability in the NNY real estate market I think the best days are behind us.
Cheers.

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