Atlanta, Miami, Las Vegas Cut Credit After Housing Bust

Credit card borrowing dropped in August from a year earlier in U.S. cities that suffered some of the biggest declines in home prices, showing consumers continue to shed debt six years after the residential market peaked, according to Equifax Inc. data provided to Bloomberg.

Credit-card debt fell 1.9 percent in the Las Vegas metropolitan area, 1.7 percent in Los Angeles, 0.9 percent in Miami and 0.8 percent in Atlanta and San Francisco, according to Atlanta-based Equifax, a provider of consumer-credit data. Total U.S. card debt was unchanged in the month, the company said.

The new data shows that regional borrowing has veered from U.S. trends with local housing markets an important influence.

“You see some unevenness in terms of recovery,” Trey Loughran, president of Equifax’s Personal Information Solutions business, said in an interview. Credit is being reduced “in some of the places where the housing bust was the worst, such as Florida, California and Nevada.”

By contrast, card debt rose 1.9 percent in Houston, 1.2 percent in Washington-Baltimore and 0.8 percent in Dallas, according to Equifax.

“People are more willing to expand credit in areas with a little healthier economic picture,” Loughran said. “Then certainly consumers are taking advantage of that a little bit more.”

Nationally, U.S. home prices have dropped 30 percent since peaking in the 2006’s second quarter, according to the Case-Shiller U.S. home-price indexes. Miami, Las Vegas and Phoenix, which had a 0.6 percent decrease in credit, all have had declines in housing prices of 50 percent or more.

Signs of Rebound

“Credit-card use appears to be enduring a payback in markets were home-price appreciation tended to be the greatest and where mortgage-credit growth was most aggressive,” Wells Fargo Securities LLC senior economist Mark Vitner said.

Americans have cut household debt by $1.3 trillion since the peak in the third quarter 2008 as the economy sank deeper into the 18-month recession that ended in June 2009, according to an Aug. 29 report by the Federal Reserve Bank of New York.

The lowest mortgage rates on record helped boost the S&P/Case-Shiller gauge of home prices in 20 U.S. cities, which rose 0.5 percent in June from a year earlier for the first gain since September 2010.

Coastal regions continue to recover slowly from the housing price slide. California cities led real estate foreclosures nationally in the first half of 2012, with Miami, Phoenix, Las Vegas and Atlanta all among the top 20 in the pace of filings, according to RealtyTrac.

Energy Boom

The slow growth is likely to continue for those areas, according to economists at IHS Global Insight. Florida and California may not return to their prerecession peaks of employment until 2016 and Nevada won’t regain lost jobs until 2018, the firm projects.

By contrast, Alaska, North Dakota, Texas, and Louisiana, which have all been beneficiaries of a U.S. energy boom, have reached or surpassed their prerecession employment peaks.

North Dakota has led the U.S. in overall economic performance in the year ended with 2012’s first quarter, according to the Bloomberg Economic Evaluation of States Index.

Texas also avoided the volatility in home prices over the past decade, Vitner said.

“As a result, consumers did not spend as freely in the boom years and did not become as overleveraged as borrowers in some other parts of the country,” he said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE