Home Prices Drop More Steeply Outside Cities In some parts of the country, house prices are dropping faster outside cities rather than inside them. It could be because migration to America's fastest growing areas has slowed in the past year. William Frey, a senior fellow at the Brookings Institution, talks about the housing markets that are cooling fastest, and why.

Home Prices Drop More Steeply Outside Cities

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Although the housing market has crashed nationally, home prices are still holding on in some parts of the country. The picture can be very different from one real estate market to the next, or sometimes even from neighborhood to neighborhood. So we've asked William Frye, a demographer at the Brookings Institution, to tell us about what patterns we can track. Good morning.

Mr. WILLIAM FREY (Brookings Institution): Good to be with you.

SHAPIRO: Tell me about the migration patterns that you've studied. Cities that used to be growing really quickly, like city centers in Miami and Atlanta, are not growing so quickly anymore. What's happening there?

Mr. FREY: Well, I think there's been a real migration correction in response to the housing slow-down across the country. And so the really fast-growing places - in Arizona, in Nevada, in Florida - almost stopped on a dime.

SHAPIRO: When you say growth is slowing in some of these areas, are you talking about exurbs like the area outside of the suburbs or are you talking about, for example, central urban Miami?

Mr. FREY: Well, I think in the really hot parts of the country it's both the exurbs and the inner part of the metropolitan area. In other parts of the country, which were not really the fast-growing areas but more modestly growing areas, like Denver or Washington, D.C., there we see the slowdown in the exurbs, which were the places that were growing the most rapidly.

SHAPIRO: There are some urban centers that do not seem to be dropping off, places like San Francisco. In my neighborhood in Washington, a house on my block just sold for above the asking price. What's going on there?

Mr. FREY: Well, you know, I think the places that had been losing people because mortgages were easier to get - say, further out in the exurbs of a metropolitan area like Washington or in places nearby California, like Nevada and Arizona - as the housing market dried up in those areas, people stayed where they were.

So it's not surprising not just to see San Francisco not losing as many people but all the way down the California coast.

SHAPIRO: It seems like for the last few decades we have seen people spreading further and further out from urban centers. Are we starting to see that reverse now as urban revitalization takes off in some areas?

Mr. FREY: Yeah, I think the real question is how long is this going to last? Is this a permanent change from the movement to the suburbs, into the exurbs, into these hot go-go areas in the periphery of metropolitan areas, or is this just a lull that's in response to the correction in the housing market, which a lot of people think may not be long lasting?

I think the jury's still out because I think there are other factors involved. The big one is energy. I mean, even a year ago we weren't at $4 a gallon.

SHAPIRO: And an hour-long commute to work seems a lot less appealing when you're paying $4 a gallon for gas.

Mr. FREY: Yes. I mean, traditionally people have made the tradeoff for cheaper housing on the outside of a metropolitan area in order to be able to commute long distances to work. Now, that was okay when you were only paying a dollar and a half for gas or $2 for gas. But when you get up to $4 a gallon for gas, you're going to say, oh, it costs as much as to commute as I'm saving on the housing, so it might be better to move in closer to the urban core.

SHAPIRO: One unavoidable fact would seem to be that the population is not going to stop growing. Is it just a matter of time until the pace picks up again, even in the exurbs and the areas that are not doing well right now?

Mr. FREY: I think this is a question that we don't know the answer to. We do have a history in this country of moving outward into the suburbs and into the exurbs. And the issue now - is the energy constraint, is the housing constraint going to be with us for a very long time? And even people that have that as a goal may not be able to achieve that goal.

SHAPIRO: William Frey is a demographer at the Brookings Institution. Thank you very much.

Mr. FREY: Sure. I enjoyed it.

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