Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



5 Major Housing Markets Lagging the Rest

While housing has had quite the rebound since it bottomed out a few years ago, five cities aren't seeing the eye-popping growth others are experiencing. But concerned homeowners in these cities should know that many of those now quickly growing cities also saw the biggest crashes in the height of the Great Recession.

According to the latest release of the S&P/Case-Shiller real estate index, which tracks home prices in 20 major U.S. cities, home prices in these markets are up 11% in 2013, and the U.S. has seen all home prices rise by 8%.

But home prices in Cleveland, New York, Minneapolis, Washington, D.C., and Charlotte have all lagged the market, as shown in the chart below:

Source: S&P Dow Indicies.

But looking at one year's growth in isolation isn't the best habit, and while these cities are behind the U.S. average, that fact doesn't tell the whole story.

Certainly, they're not world beaters, but the picture looks much better for those five cities when considering the long-term picture. When we look at the data since August 2006, we see that only Minneapolis trails the 20-city composite and only marginally so. The rest of the cities all best the average, and the real winner is Charlotte, where home prices have been surprisingly stable.

As a matter of fact, a big reason for all of these not having huge growth rates is the result of them missing the insane peaks and plummets through the housing bubble. If we look at their average home price performance (baselined to 2000) compared to the top five cities of San Francisco, Las Vegas, Atlanta, Los Angeles, and San Diego, we see something very interesting:

As you can see, the bottom five cities saw a much less dramatic fall from their peak, falling 32% compared to more than 45% for the top five and 35% for the 20-city average. And while their total growth since 2000 trails the others, if we look at it since 2000, it only amounts to a difference of about 0.5% per year.

With that, let's dive into each of these markets to see what things have looked like since 2000 and if any companies are set to benefit if home prices begin rapidly rising.


Despite its population rising by 31% since 2000, Charlotte's housing prices have only risen by 24% over the past 13 and a half years. However, it also had one of the narrowest declines, as its prices fell by 20% from their peak, and are now less than 10% away from eclipsing that peak. As you can suspect, Bank of America (NYSE: BAC  ) , which is headquartered in Charlotte, is likely pulling hardest for Charlotte to see home prices climb, as it holds an astounding 78% of deposits there as of last June. In fact, Bank of America and Wells Fargo (NYSE: WFC  )  have more than 90% of the deposits in this market.

Washington, D.C.

Like many of the cities whose prices climbed the fastest, Washington, D.C,. has had a rather dramatic rise and fall. And while its prices haven't come back nearly as quickly as some of the other markets, the total home prices climbing 103% over the last 13 and a half years is among the best in the country. One of the biggest benefactors of this is likely Richmond-based Capital One (NYSE: COF  ) , which has a 15% market share.


Of the cities in the bottom five for growth this year, Minneapolis' housing prices, which stood at almost 40%, fell the most dramatically. Yet unsurprisingly, it's also had the best rebound, as prices have risen almost 30% from the bottom seen in March 2011. Wells Fargo again is likely set to benefit from a continued rebound here, as it holds almost half of the market share. In addition, Minneapolis-based U.S. Bancorp (NYSE: USB  ) , with 25% of deposits is likely rooting for its home city to continue to claw back.


Cleveland has some of the narrowest and slowest growth of the cities they measured, and its home prices are only up marginally since 2000. But if it can have any consolation, while its prices are only up 6% since 2000, the similarly struggling Detroit has seen its prices actually fall by 10% over the same period. Which bank is hoping for those prices to come back most of all? Likely PNC (NYSE: PNC  ) , which holds 11.5% of Cleveland's deposits and 10.5% of Detroit's.

New York

Somewhat surprisingly, New York is seemingly still struggling to recover, as its home prices are only up 9% from the lows seen in March 2012, and it is the worst performer of the 20 cities measured over the last three years. Jaimie Dimon of JPMorgan Chase is likely earnestly rooting for the Big Apple to rebound, as not only does it hold 34% of the deposits in the city but 402 million of its 832 million (48%) of its total deposits are located within the confines of New York.

While these five cities are all the slowest growing over the past five years, they have all seen some of the more stable growth as well. Certainly, there is still room for gains in all of them, but if you find yourself owning or are considering buying a home in any of them, this trend shouldn't present much of a concern.

How to find the next bank stock home run
Have you missed out on the massive gains in bank stocks over the past few years? There's good news: It's not too late. Bargains of a lifetime are still available, but you need to know where to look. The Motley Fool's new report "Finding the Next Bank Stock Home Run" will show you how and where to find these deals. It's completely free -- click here to get started.

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2661344, ~/Articles/ArticleHandler.aspx, 9/27/2016 8:38:18 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 4:00 PM
BAC $15.29 Up +0.20 +1.33%
Bank of America CAPS Rating: ****
COF $71.80 Up +0.99 +1.40%
Capital One Financ… CAPS Rating: ***
PNC $88.55 Up +0.78 +0.89%
PNC Financial Serv… CAPS Rating: ****
USB $42.90 Up +0.43 +1.01%
US Bancorp CAPS Rating: ****
WFC $45.09 Up +0.21 +0.47%
Wells Fargo CAPS Rating: ****