Which Cities Will Recover First
For the fourth consecutive month, there was modest improvement in home prices in May. The index of 20 metropolitan areas had an annual decline of 17.1 percent in May from the same month in 2008, an improvement over April’s 18.1 percent fall. The Federal Housing Finance Agency notes that some cities will recover sooner based on the degree of their participation in the bubble.
Home prices sky rocketed and economic wealth was largely created by a real estate bubble. Fresno, Modesto, Salinas, Bakersfield, Stockton and Los Angeles saw home prices rise to unsustainable levels and then collapse and along with it jobs. In these cities unemployment rose to 10% and still rising.
The study shows the how a cities economic make-up determines its well being. Manufacturing areas, hurt by historical changes such as mega shifts of manufacturing jobs overseas were already battered even before the recession. Detroit and Flint or Youngstown Ohio will not see much recovery until the economy is restructured. Cities with high-tech capabilities like Seattle, Huntsville, Ala., or Boulder will fair better. Cities with strong financial centers will also see slower recoveries than those with robust technology sectors.
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