REAL ESTATE SLUMP? WHAT REAL ESTATE SLUMP?
Real estate still equals real headaches in most places. Although home sales are up nationally from a disastrous 1991, residential real estate in California and much of the Northeast remains a picture of despair. Price incentives haven't helped much. Mortgage rates are at 19-year lows (an average of 7.95% for a 30-year conventional loan). And some houses have dipped as much as one-third in price from the boom days of the 1980s. Yet layoff frenzy in Corporate America has left people in many parts of the country too scared to buy.
But dotted across the map are markets that do quite handsomely (table). These Elysian fields of housing prosperity are generally clustered around smaller cities where the past decade's prices didn't spiral out of control and where the local economy has weathered the recession. Homebuilders in these areas are busy, home buyers are eagerly taking advantage of still-modest prices, and real estate brokers are enjoying plenty of action.
Columbus, Ohio, is one big winner. In the go-go real estate era, the city of 633,000 was the Land That Time Forgot. In 1987, when the median home price in San Francisco spurted by 20.4%, Columbus posted a pedestrian 5.7% rise. Today, Columbus' prices keep inching up at about 5% annually, while San Francisco's are dropping by 3%.
Columbus' secret: Its white-collar work force is in sectors scarcely touched by the layoff scythe. Unemployment is a mere 5.8%. As the state capital, Columbus benefits from the steady paychecks of government workers, as well as those from huge Ohio State University. Strong private employers, such as the corporate headquarters of apparel chain The Limited Inc., provide extra ballast.
Among the beneficiaries of this propitious climate are Trudy and Bruce Busby, who had no trouble selling their old three-bedroom Cape Cod at a nice profit to move up to a four-bedroom nearby. The old house, says Trudy, an instructional assistant at Ohio State, "was on the market for eight days." San Francisco homes languish unsold for months.
In the West, dismay over California's crumbling economy has been a boon to Boise, Idaho, and Salt Lake City. Thanks to the decline in defense contracting and other recessionary malaise, unemployment in the Golden State hit 9.8% in August, while housing prices tumbled 3.5% during the past year. In Boise, however, joblessness is a mere 3.8%. High-tech employment may be suffering in other areas, but not in Boise, where exploiting successful computer industry niches is an art. Hewlett-Packard Co., which produces its popular laser printers here, is expanding rapidly. Its plant employs 4,100 people, with 500 hires in just the past six months.
Spur Products Corp., which makes interfaces between printers and mainframes, moved to Boise last fall from El Segundo, near Los Angeles. Fed up with Southern California's high costs and traffic hassles, the small (36-person) company was attracted to Boise's amenities. Many El Segundo employees had two-hour commutes; now, no one lives more than 20 minutes from work.
ROCKY MOUNTAIN HIGH. Denver shows that even more urbanized locales can be housing hot spots. Although beset by pollution and congestion problems, the so-called capital of the Rockies offers outdoorsy attractions that have long beckoned newcomers. Having survived a 1980s bust, when the oil and gas industry collapsed, Denver has emerged as a diverse economy with few cyclical manufacturing companies. Regional phone heavyweight U.S. West Inc. is one steady employer, along with the federal government, which has its highest concentration of nondefense workers outside Washington. A new airport is being built, further sparking job creation. Thus far this year, home sales in Denver are up a head-turning 26%.
Given performances like that, the usual boosterism of real estate sales folk is on the mark. Says Roy Currie, executive vice-president for the Charlotte (N.C.) Association of Realtors: "We've got a good year going." Indeed--the city, a mecca for new small businesses, has added 6,000 jobs this year. No wonder home sales there are up 13%. For all of the markets battling the recession, these success stories offer, if not hope, at least a bit of inspiration.HOUSING'S OASES OF PROSPERITY
BOISE, IDAHO High-tech niche companies keep economy buoyant. Expatriate
Californians pour in
CHARLOTTE, N.C. This magnet for small business is also pushed as a very
congenial place to live
COLUMBUS, OHIO State government, a huge university, and a surprisingly healthy
service sector provide a stable economy
DENVER Home-sales market benefits from diversified, white-collar employment
base and new airport
SALT LAKE CITY Another hot spot for ex-Californians. Local biotech and software
companies cruise through recession
Larry Light in New York, with Nancy Peacock in Medina, Ohio, Sandra D. Atchison in Denver, Dori Jones Yang in Seattle, and bureau reports