While no one wants another housing bubble, people across the U.S. are hopeful that housing prices will continue their recovery following the Great Recession.
In fact, earlier this week, the S&P/Case Shiller real estate index, which measures the home prices in 20 of the largest U.S. cities baselined to 2000, was announced through July -- and five cities have seen their prices skyrocket in 2013:
Source: S&P Dow Indicies.
As you can see in the chart, the markets in San Francisco, Las Vegas, Atlanta, Los Angeles, and San Diego have led the charge for the recovery in housing prices. Meanwhile, cities like Charlotte, Washington D.C., Minneapolis, New York, and Cleveland have all seen their home prices grow slower than the U.S. average over the last year.
|
City |
Month Over Month |
2013 |
1 Year |
3 Years |
5 Years |
|---|---|---|---|---|---|
|
San Francisco |
2.2% |
20.1% |
24.8% |
7.3% |
2.4% |
|
Las Vegas |
2.8% |
17.7% |
27.5% |
6.1% |
-4.9% |
|
Atlanta |
2.2% |
16.3% |
18.5% |
0.5% |
-2.2% |
|
Los Angeles |
2.1% |
15.5% |
20.8% |
5.4% |
1.4% |
|
San Diego |
2% |
14.6% |
20.4% |
4.5% |
1.8% |
Source: S&P Dow Indicies.
San Francisco
Of the five cities that have had the best rebound in home prices this year, San Francisco has seen its prices recover the most since they bottomed out in March of 2009. Home prices in the City by the Bay have grown over 50% in a little over four years.
Photo source: Idleformat.
Surprisingly, according to the latest data from the FDIC, despite Wells Fargo (WFC +0.20%) being headquartered in San Francisco, Bank America (BAC +0.75%) has a commanding lead in market share, with over 50% of deposits in the area versus 19% for Wells Fargo as of June 2012. Considering those are two of the three of the largest mortgage originators in the country -- they could both be set to benefit as San Francisco continues to rebound.
Las Vegas
Las Vegas is a great example of the roller coaster housing prices we all witnessed as it is one of the cities that saw its prices rise and fall the most during the mortgage boom and bust:
Photo source: Sean MacEntee.
Home prices in Nevada fell over 60% from their peak in August 2006 to their low in March 2012, but they've rebounded 35% over the last 16 months. While Bank of America and Wells Fargo also have a major presence in Las Vegas, Citigroup (C +2.20%) rounds out the top three. While Citi announced it was eliminating 1,000 jobs this week in its mortgage unit, it had more to do with the slowdown in refinancings than business conditions in specific markets. While Vegas may not see a spike in prices like it did from 2003-2006, it is certainly on the mend.
Atlanta
When compared to the other four cities, Atlanta is very unique in that it didn't see nearly the run up in home prices in the 2000s, as they peaked in January 2007 at a gain of almost 37% over the January 2000 levels. By comparison, home prices in San Diego rose 150% in a five-year period.
Photo source: Girolame.
Surprisingly though, Atlanta has watched its prices come back incredibly strong, up 35% since March of 2012, which is only bested by San Francisco's 40% rise. Southern banking stalwart SunTrust (STI +0.00%) could be the biggest benefactor here, as almost 33% of its loans are mortgages or home equity lines.
Los Angeles
While Atlanta had the lowest peak, Los Angeles had the highest one before the crisis, as its home prices rose over 170% from January 2000 to September of 2006. Even despite prices falling 42% from top to bottom, Los Angeles has watched its housing prices jump the most of the 20 cities measured, as they currently stand more than double what they were in 2000.
Photo source: Channone.
San Diego
Last, but certainly not least, is the third city in California in the top five, San Diego, where except for the fact that prices peaked earlier, its housing prices followed an almost identical path as Los Angeles:
Photo source: Cindy Devin.
Prices are still down around 25% from their peak -- but up almost 30% from the bottom seen in April of 2009. Surprisingly, one company poised to benefit from the jump in California residential real estate is Minneapolis-based U.S. Bancorp (USB +2.61%). While it is not broken out each quarter, as of December 31, 2012, almost 13.7% of its total residential mortgages held were located in California, versus just 11.7% in 2011, and the total balance of those loans grew almost 40% year over year.
Although all five of these cities may be below the peaks seen in the middle of the last decade, it is encouraging to watch them all rebound so well from the lows of just a few years ago. The trend of rebounding home prices will help both consumers and companies as we all continue to recover.
