The airline industry. An upfront apology for the unintentional hiatus in my posting folks, but I uncovered the not-so-hidden problems with our airline industry this week and spent about 50 hours delayed in 6 days.
Why do I think the airline industry is in far worse shape than the real estate market? Because the airlines are getting hit in every direction, whereas the real estate market has far more localized pockets of failures matched to areas of improvement.
Case in point, I was visiting with a Chicago Realtor about the state of the market from the peak a few years back. She explained that the market in the Northwest suburbs has such a disparity that you have to break down the price declines by neighborhoods, not just cities. For instance one neighborhood was sitting just fine and had faced an approximate 3% loss in value at most from the peak in 2005/2006. Meanwhile a few miles down the road home values had gone from the upper $400′s to selling for a meager $315k.
So what does that mean for us Californians? I think we get hit with far more doom and gloom because while the declines are somewhat localized on a national scale(some cities have gotten hit way harder) – the overall market decline covers most of the state.
PMI’s assessment of which markets are at stake for continued loss or gain shows just how localized the “crash” is.
Photo Courtesy of PMI
As you can see, a very large section of the country has a slim to none chance (according to their prediction) of losing home values. Markets appear to be strengthening just about everywhere else other than here and in Florida.
The LA Times blog reports:
Mortgage insurer PMI Group’s latest report on the risk of falling home prices concludes there are “two distinctly different paths” for housing in America right now: most of the nation’s housing markets are showing signs of improvement, but bubble-inflated markets in California and Florida are showing signs of further deterioration amid rising foreclosures.
But what does that mean for us locally?
At first glance it gives little hope to most of us since most Laguna Hills and Mission Viejo residence have lost value on their homes. It is smart to remember, however, that most of the huge losses are very localized. Additionally some neighborhoods just haven’t been hit quite as hard (see Neighborhood Spotlight: Castille). So when local analysts or the national news get all hyped up about just how horrible the real estate market is, remember that it’s not this bad everywhere – us Californians are just seeing the worst of it.