Boomtowns Lag in the Recovery
All cities are not created equal - some are healing from the recession much faster than others, according to the third quarter MetroMonitor report from the Brookings Institution.
For example, if you lived in Omaha, Neb. or Council Bluffs, Iowa, you'd be enjoying an unemployment rate of less than 5 percent. But for Stockton, Calif. residents, unemployment is at a depressing 15 percent.
What makes the difference between the winners and the losers in this tough economy?
In a real estate version of the turtle and the hare fable, there is a widening gulf between overbuilt, formerly fast-growth cities and the rest of the country.
Overall, the metro areas that were still worsening in the third quarter were the places that grew the fastest in the real estate boom (like Las Vegas), or that lost population in the crash (like Detroit) and are now plagued with empty houses. The 20 economies that weakened the most in the third quarter, out of the 100 metro areas studied by MetroMonitor, are all located in states still slammed by high levels of new foreclosure filings, according to the latest information by data firm RealtyTrac.
Prices continued to fall by more than 10 percent over the last year in several battered one-time boomtowns. "House-price recovery remained elusive in overbuilt metro areas in Florida, inland California, and portions of the Inter-mountain West," says the report.
In contrast, the economies with the best overall improvement included many towns that were largely passed over by the boom, from Little Rock, Ark., to Oklahoma City. Quieter towns also had a clear advantage over former boomtowns in retaining home values. Average home prices actually rose more than 5 percent over the last year in Wichita, Kansas; Jackson, Miss.; and Rochester, N.Y.
Large, older cities with more diverse economies and less overbuilding -- such as Boston and New York -- ranked near the middle of the list, with mixed economic indicators.