Housing Prices Up, But Market Far From Recovered
CELESTE HEADLEE, HOST:
This is TELL ME MORE, from NPR News. I'm Celeste Headlee; Michel Martin is away. Coming up, Eric LeGrand was a star college football player, until a tackle left him paralyzed. We'll speak with him about his new memoir, and his new life. That's in a moment.
But first, let's turn to housing. The Standard & Poor's Case-Shiller Home Price Index is one of the top measures of the U.S. housing market; and the latest report, just out this week, says prices are on the rise. The index looks at 20 major metropolitan areas, and it finds home prices in each of those market. And they went up for a third straight month, as of July. But of course, those numbers can't tell the whole story, especially in two major cities that are on either end of the success spectrum.
So we're joined now by two people who can fill out the picture for us. Quinn Klinefelter is the senior news editor at WDET, in Detroit. Prices there are up 6.2 percent since last year. And also with us is Eugene James. He's the director of the Atlanta branch of Metrostudy. That group looks at housing markets across the nation. And in the Atlanta area, prices are actually down almost 10 percent since last year.
So let's start with you, Eugene, and kind of get an idea of the national picture. That's what this report looks at - and it really is kind of palely rosy, don't you think?
HEADLEE: There's an improvement in housing prices across the board.
EUGENE JAMES: There's no doubt, home prices are finally on the rise after a five-, six-year decline in home prices. Doesn't mean we're out the woods yet, but it is nice to see that prices are on the rise, across the nation.
HEADLEE: Meaning, Eugene, that we've hit bottom, and we're slowly climbing back up?
JAMES: It does appear that way. All the metrics that we look at, are pointing in the upward direction. So yes, I do believe not only have we hit bottom, we are starting to crawl our way off that bottom.
HEADLEE: And that's true in Detroit as well, Quinn. The report shows Detroit's housing market is doing pretty well when it comes to growth over the past year, especially considering that prices dropped - really, so far. What's causing the rise?
QUINN KLINEFELTER: Well, it's really fallout from the Obama administration's signature success economic story - the auto bailout. When the auto industry was dying, you couldn't get rid of a house. Many, many people had homes that were underwater. And that seems to have stabilized as the auto industry has stabilized. And - as you say, home prices in the metro Detroit area have climbed for about the past 13 months now, compared to a year before.
Some of the most attractive areas in the counties surrounding Detroit - Macomb, Oakland and Wayne County, that Detroit's in - are showing a fair amount of good efforts on the sales for houses there. And actually, where they'd had inventories backlogged - with house after house they couldn't get rid of - now, they're having bidding wars, to get some of the houses off of those lists. So it's been a dramatic improvement.
HEADLEE: So are you saying it's only outside the city limits, and not within the city of Detroit?
KLINEFELTER: No. The city itself is still showing that. But, you know, there still are problems. I mean, a Detroit house, just in average in the metropolitan region - say, if it was worth about $100,000 in January of 2000, it's worth about 75,000 at the moment. But that's still better than like, a year ago, where it was worth only about 67,000. So still, there's a lot to climb out of. It's still a struggling economy in Detroit, but a lot of positive signs.
HEADLEE: And some optimism, I understand. Eugene James, things are a little different in Atlanta, though. The annual numbers there don't look quite as good. Monthly numbers are up, but prices actually dropped by almost 10 percent, compared to last year. Why?
JAMES: Well, I think that's, in part, because we have sold so many lower-priced houses. Those less than $100,000 have been dominating the market, and they were hit the hardest of all. The mid-tier properties - let's say, 80- to $170,000 - are not down as much. They're still down, but not as much. And then the higher-tier properties - those around $180,000 - those prices are actually up above the one number that we hear from Case Shiller.
HEADLEE: What you're saying is that in fact, the higher end, the higher-priced homes - the prices didn't fall that much and in fact, they've risen above what they were before the housing collapse; but that there's a huge inventory of lower-priced homes in the Atlanta metro area, and those are still struggling to rise back up.
JAMES: The low-price houses - took longer for them to start to recoup. But just like Quinn said, our inventory levels are extremely low. So we're actually seeing bidding wars take place in all price points as well, from the low end to the high end.
HEADLEE: We're going to talk more about that. This is TELL ME MORE from NPR News. We're discussing the new housing market numbers that were released today. Good news for most cities; bad news for a few of them. My guest is Quinn Klinefelter. He's the senior news editor at WDET in Detroit. And also with us, Eugene James from Metrostudy in Atlanta.
And let's go back to Detroit for a moment, Quinn. Prices, as you mentioned, are not quite back to where they were in 2000. You gave an example of 75,000 today, as opposed to 100,000 in 2000. Do you think that looking at these numbers kind of gives you an accurate read, though, of the whole picture, across the entire metro Detroit area?
KLINEFELTER: Well, the problem is, it's a bit of a mirage. It certainly is a very good sign, in a lot of ways, that the housing market overall, nationally, could be on the rebound; and that this is a good sign of it because things had gotten so rough in Detroit. And in the city, the downtown area, the midtown area near Wayne State University, are very visible areas where they've put a lot of effort into it. There's 98 percent capacity for people - for homes in the midtown area, by itself.
But still, the city, the region, suffered tremendously from the problems with the auto industry - and beyond. It was in a recessionary climate way before the rest of the nation ever saw a recession; people still struggling for jobs. The city of Detroit itself lost a quarter of its population - one-fourth of its population - from the most recent census to the one previous; in 10 years, then.
And they still have thousands upon thousands of blighted and abandoned buildings in the city that the city itself, which is teetering on the edge of financial collapse - still - runs out of money to be able to demolish. So, you know, it's a great sign, in many ways. But there's still many, many lingering problems that need to be addressed.
HEADLEE: I have to say, it's amazing that downtown is at 98 percent capacity. I mean, when I was last in Detroit, there are lofts everywhere. And I understand that in fact, the only place in Michigan where the population is growing, is downtown Detroit.
KLINEFELTER: Yeah. They're trying to really get in younger people, to try to change the mindset from being so reliant on the auto industry; trying to get into new technology fields, and things like that, to try to draw people in. And the city itself had gotten a pretty tarnished image for such a long time, that it's been a struggle even within the state of Michigan - let alone drawing people from outside of it. But they are making many inroads in trying to do that; and these most recent housing price indices that they're showing, are certainly a sign that that seems to be - at least, playing with some people.
HEADLEE: Well, I wonder if any of this is familiar to you, Eugene James, there in Atlanta; where you have an urban city where there are a lot of perhaps cheaper or dilapidated homes, but the core area - where the government, or the city, is really making an investment - is populated, and the housing prices are up.
JAMES: Well, I'll tell you this - you are correct about a lot of the dilapidated housing being kind of closer in to the city's core. And those are the areas that seem like - have been hit the hardest. But it's probably worthwhile mentioning, though, that Atlanta is extremely large. According to Case-Shiller, it's roughly about 100 miles north-south; about 100 miles east-west. So it really is kind of hard to peg how Atlanta looks, with just one figure; because there are, certainly, parts of Atlanta that are appreciating, and doing far better than other parts of the city.
HEADLEE: That's probably true anywhere we go. So let's kind of pull back on our focus; and see if we can learn anything from these two cities, about what's going on nationally. So Quinn, what are the things, do you think - I mean, you talked about the auto bailout; and I can't imagine every city can get an auto bailout, or anything similar. What can we learn from Detroit, that might help some of the other cities in the country?
KLINEFELTER: Well, as you say - I mean, there's been talk about whether there should be any kind of an economic stimulus package - another one - again, which is something that is likely not going to fly, when you're in the midst of a presidential election. But Detroit really does have a lot of factors that probably don't pertain, as much, to the rest of the nation - just in terms of the reliance on a single industry, which really had hit bottom for some time.
If anything, it might be a sign of hope - more than a sign of decay or some of the other horrid images that have been put out about Detroit, in recent years - because there is this fact that it seems to have hit a bottom, and that that is done; and that it's actually progressing from that floor; and that people can hang on, and actually have a chance to sell things now. For so long, people had homes that they just could not - you know, even remotely have a chance of getting rid of. Now, you have inventories that were just deluged with homes that are dwindling, so...
HEADLEE: You know, Quinn, I'm just wondering: For all the people - well, maybe there aren't that many people anymore; but there had to have been people who just sat there on their homes, right? And is there a shadow inventory in Detroit, that could drop at this point now that housing prices are beginning to rise?
KLINEFELTER: Yeah. The inventory does seem to be dwindling. I mean, there's a lot of houses that people hadn't been able to move; that now, they are able to. That seems to be - very much - the way. You hear people talk, though, about - is it ever going to get back to where it was? And...
KLINEFELTER: We used the example a while back - I did - of a house, let's say was worth $100,000 in 2000; only worth about 75-, 76,000 now. That same house before the housing bubble would have burst, it was probably worth right around 127,000. So you're not going to get back to that, more than likely. And so when people think, you know, how much are we improving? They've got to - again, look at what the new normal is; and realize that it's a different ceiling, a different floor, than people have been used to dealing with over the last decade.
HEADLEE: The new normal - we keep hearing that, since the Great Recession, Eugene. And for a lot of people, perhaps who've still held onto their homes and are still underwater, they're going to take a hit. It's probably important to remember that December 31st is the deadline to short-sell your house without taking a tax penalty, right?
JAMES: That is correct. And I hope that folks realize that sometimes, it might be better to sell now, if they are in need of a larger home, because you know, right now, you can still take advantage of these great deals that are out there. But the deals are dwindling fast.
HEADLEE: Because we're running out of inventory?
JAMES: Running out of inventory, that is correct. If it were me, I certainly would look at trying to sell my smaller house in order to move up to a larger house; understanding the fact that I'm not going to get what the house was worth six years ago.
HEADLEE: Eugene James is the director of Metrostudy in Atlanta; The group looks at housing numbers across the nation. And he joined me from WCLK, in Atlanta. And Quinn Klinefelter joined me as well. He's the senior editor of WDET in Detroit; kind enough to join us from those studios. Thanks to both of you.
JAMES: Thank you.
KLINEFELTER: Thank you.
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