James Diffley, Group Managing Director, IHS Global Insight Diffley heads the local forecasting group at IHS Global Insight, an international economics firm that has put the U.S. housing market under a microscope in recent years. He likes to think of the recovery question in terms of the first markets within regions. Like several other economists interviewed for this survey, he thinks that Texas and Carolina markets that didn’t bear the full brunt of the downturn will return to health earlier.
He picked several markets that out-performed others during the downturn, either because homes remained affordable, or because population and/or job growth outpaced the competition.
1. Washington, D.C. Diffley points out that Washington, D.C. took its hits early; it was one of the first markets to decline as the bubble burst. It was also among the first to adjust its pricing. “Now with the growing importance of the federal government in the economy, the local economy will be among the strongest, generating above average incomes,” he says.
2. Atlanta, Ga. Can Atlanta regain its former glory as one of the top home building markets in the country? Diffley is reasonable optimistic. “The long term economic growth fundamentals continue to be very strong. Its home prices have over-corrected downward. With the troubles of Florida and Charlotte, it is clearly once again the South’s leader.”
3. San Antonio, Texas. It’s hard to quibble with this pick, given that San Antonio actually managed to add jobs last year. Its population also grew last year. These factors along with home prices that grew modestly during the boom have prevented a collapse of home values. Existing home prices fell only 1 percent last year.
4. Raleigh, N.C. Diffley expects Raleigh to be among the first markets “to pick up where they left off.” With a strong job base, a growing population, and home prices that didn’t go wild during the boom, the market hasn’t felt the pain that other markets did during the housing bust.
5. Minneapolis, Minn. The so-called Little Apple may be a big player in the fortunes of the midsection of the country. With steady population growth (one percent annually over the last five years) and stable existing home prices (they fell less than the national average last year), Diffley calls Minneapolis “the hope of the Midwest!”