February 12, 2012

The Richest Cities Where No One Wants to Move

Many thanks to Burbed reader Michael Boltonestater for passing along this article, which was summarized on Yahoo Real Estate.

The Richest Cities Where No One Wants to Move

24/7 Wall Street
By Charles B. Stockdale, Michael B. Sauter; Posted: February 3, 2012 at 7:01 am

Many Americans still are holding off on buying homes in some of the country’s most expensive cities. While home prices fell 23% on average in the largest cities since the housing crisis began, for many home buyers the drop was not enough. Based on a new report released by Trulia, 24/7 Wall St. identified the 10 metropolitan areas to which no one wants to move.

Trulia ranked the 100 largest metropolitan areas by their Metro Movers ratio, which measures homebuyer activity and interest metropolitan areas. The ratio compares the number of online searches of local residents looking to buy elsewhere to the number of out-of-town homebuyers looking for real estate in the area. According to the report, a ratio of two means that there are twice as many home searches by people looking to leave the area as to move in. All of the cites no one wants to move to have a ratio higher than two.

The cities that attract few buyers experienced modest home price declines since the recession began, especially relative to their high home value. As a result, home prices in these areas are forecast to decline further, and homebuyers are waiting until they do. All of the 10 cities no one wants to move to have among the most expensive homes in the country. Newark and Bethesda, two cities with twice as many people looking to leave as looking to move in, have among the top 10 highest median home values in the country. Home prices in these cities declined at just the national average, and next year, they are projected to decline more.

120211-blightI think this 24/7 Wall Street site has forgotten how the real estate market works.  Expensive markets do not stop being expensive because other markets are not expensive.  Expensive markets are Special, and the decline of other markets makes Special markets More Special.

On the other hand, the list of the Top Ten Places Where More People Want to Move Out Of Than Move To is not as full of Specialness as you might expect.  Consider this conclusion:

People do not want to move to cities that are largely older and more densely populated. Regions in the northeast that are of little interest to out-of-town buyers include Philly, Newark and New Haven. Other older metropolitan areas include San Jose and Seattle. Kolko suggests the move away from urban areas has a lot to do with expense. “Even though people often say they want to live in urban neighborhoods where they can walk more and drive less, they get more for their buck where the car is king. Most long-distance searches are toward smaller, suburban, more sprawling areas, not toward the older, dense cities of the northeast.”

120211-i680-trafficYes, that explains completely why exurban areas are increasing in value compared to close-in neighborhoods near major employers.  Just look at the price increases in a community of newer homes in Danville, compared to a worn-out community full of tired, old houses in Palo Alto.  And the price of gasoline going up shouldn’t have any effect on communities further from high-paying jobs, either.  After all, the car is king, and if you’re going to sit in traffic for an hour and half, your reign will last longer.

California Zillow Home Value Index

Ah well.  On to the list of places people can’t wait to leave.  Have you made any predictions which metro areas will qualify?

For the chart below, the Metro Movers Ratio is the above mentioned proportion of residents looking at homes outside the region versus other people looking at homes in the region, per Trulia.  The home value decline is from peak pricing, and the forecasted percent change in home price is through third quarter of 2012.  For comparison, the national unemployment rate was 8.7%, while the typical home declined 23% from the peak nationwide.

Rank City/Metropolitan Area Metro Movers Ratio Median Home Price Home Value Decline Unem-ployment Forecast % chg price
10 Omaha-Council Bluffs, NE/IA 2.04 $138,000 -2.8% 4.7% +1.5%
9 Camden, NJ 2.11 $180,000 -24.7% 9.5% -3.3%
8 Seattle-Bellevue-Everett, WA 2.11 $350,000 -29.2% 8.2% +0.1%
7 Baltimore-Towson, MD 2.17 $258,000 -22.3% 7.2% -0.8%
6 New Haven-Milford, CT 2.21 $220,000 -21.1% 9.2% -1.6%
5 Bethesda-Rockville-Frederick, MD 2.25 $700,000 -28.9% 5.4% -5.6%
4 Philadelphia, PA 2.40 $265,000 -12.9% 8.2% -1.7%
3 Washington-Arlington-Alexandria, DC/VA/MD/WV 2.54 $390,000 -27.7% 6.0% -3.3%
2 San Jose-Sunnyvale-Santa Clara, CA 2.60 $546,000 -32.5% 9.8% -3.8%
1 Newark-Union, NJ/PA 3.65 $400,000 -24.7% 8.9% -4.6%

120211-sanjose-yahooCurses!  Losing out the #1 spot is bad enough, but losing to NEWARK?  This is a grave insult.  People may want to move out of Newark, but I assure you, it isn’t because it’s too expensive.  It’s because it isn’t Special, and no doubt residents aspire to relocated to Places of More Specialness.

I mean, can you really take this analysis seriously, when this is what they have to say about our being #2 on the list?

Image of San Jose from Yahoo News Story; Sean O’Flaherty / Wikimedia Commons

The median home price in the metropolitan region of San Jose-Sunnyvale-Santa Clara is $546,000, the third highest in the country. The median family income is the fourth highest in the country. Home prices may simply too high for many people. The median mortgage payment at the peak of home prices as a percentage of median monthly family income was 46%. This is one of the highest rates in the country, reflecting the exceptionally large burden home prices place on residents in the area.

There is no price that is too high for the Real Bay Area.  These writers are clearly spending too much time in those tired and broken down urban hellholes of the Northeast, and couldn’t recognize Specialness if it bit them on the ass.

Look at this kitchen.  Now this is the kind of Specialness you can only get in San Jose for half a million dollars!

High home mortgages are not a burden, they’re a reward for getting to live here!  Plus, they’re tax deductible!

Comments (16) -- Posted by: madhaus @ 5:18 am

16 Responses to “The Richest Cities Where No One Wants to Move”

  1. Petsmart groomer Says:

    > a ratio of two means that there are twice as many home searches by people looking to leave the area as to move in

    Yet bob is still around.

  2. The Gilroy Alex Says:

    It baffles me, half a mil to live in Slummyvale or San Hosebag, where that same half-mil would buy about 10 acres out where I am, and a bicycle ride to a lot of things.

    And, it’s real easy for an individual in the Valley to spend $600 a month on food, I caught myself doing it and I was not all that extravagant. Out here my food runs me about $50 a month if I’m careful, hundred or two if I’m not.

    A small car is cheaper to commute with, still, than taking the train, the VTA system is cheaper, all the rides ya want for $6 a day or $70 a month for an adult pass but the time it takes up isn’t always worth it.

    True, it’s a mix between crazed Tea Party whities and Mexican nationalists out here, and that’s just Morgan Hill.

  3. Kimberly Says:

    The main thing Sunnyvale has going is it feels like it’s an easy commute to anywhere, even multiple caltrain stations.

  4. Real Estater Says:

    >>it’s real easy for an individual in the Valley to spend $600 a month on food

    Are you kidding? I spend $600 a month on utilities

    >>The main thing Sunnyvale has going is it feels like it’s an easy commute to anywhere, even multiple caltrain stations.

    The problem is, Caltrain and BART are so expensive it’s actually cheaper to drive. The only incentive for public transportation in the Bay Area is parking costs and parking ticket costs in San Francisco.

  5. Real Estater Says:

    >>Just look at the price increases in a community of newer homes in Danville, compared to a worn-out community full of tired, old houses in Palo Alto.

    Value is in the land!

  6. SEA Says:

    “The problem is, Caltrain and BART are so expensive it’s actually cheaper to drive.”

    And so many people complain when the price of gasoline increases a few cents.

  7. Crissa Says:

    I guess this is why downtown San Jose is losing residents…

    …ohwait it’s not…

  8. nomadic Says:

    #4, #6 – how can CalTrain be more expensive when 350 HP sucks down (a lot of) premium gas, and maintenance for an imported car is so costly?

    RE, polar bears are crying over your utility bills. Why don’t you buy some insulation? The state will even rebate part of the cost for you, Mr. Drano-cheapskate.

  9. madhaus Says:

    My Sunnyvale shack is actually reasonably well insulated, and we had a $500 utility bill for December. It’s never been this high before, or even close to that. And we have gas heat, water heater, cooktop, and dryer. The natural gas portion of that bill was $70.

    I’ve seen several people complaining about shockingly high utility bills in the past month or two.

    That said, it most certainly is not cheaper to drive compared to CalTrain or BART. Somebody needs to consult a financial professional. Then again, this is the same logic of ignoring the costs of a down payment in calculating buy versus rent.

  10. Sunny(vale) Kim Says:

    Are you kidding? I spend $600 a month on utilities

    I bet most of it for heating part (gas) and he has heating system installed in 1950s. This is what happens when someone cannot think of anything other than changing light bulbs and using drano. After all, house has no moving parts.

  11. CB Says:

    #9

    $430 in electricity means one thing. You’re growing Indian cilantro indoors so you can prepare meals to impress your workplace superiors.

  12. madhaus Says:

    CB, if I’m going to spend $430 on electricity to grow something indoors, it sure as sh1t isn’t going to be Indian cilantro.

  13. CB Says:

    Are you charging an electric car? That just seems exorbitant for electricity.

  14. A. Lewis Says:

    My PG&E hit $285 in December and $215 in January, and thought it was outrageous (for 4 people)! Man, you guys (and gals) use a lot of energy. Have a care. I thought the weather was so great in Santa Clara County you didn’t need so much electricity. What are y’all doin’?

  15. A. Lewis Says:

    Oh, and BART saves me a lot of money vs. driving to work. About half of the last few years I also managed to carpool to the bart parking lot, which saved gas, wear and tear, and got us a primo spot to boot. Carpool partner changed jobs away from a BART stop, though…

  16. S.Schultz Says:

    …they’re a reward for getting to live here!

    That would make terrific California politician re-election slogan vis a vis taxes.


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