Thursday, April 1, 2010

How Did Some Markets Avoid the Bust?

Housing price increases in 249 of the 383 metropolitan areas tracked by the Federal Housing Finance Agency were below the 8.1 percent national rate of increase during the boom.

These cities also escaped serious declines in the last two years, New York Federal Reserve staffers noted in a report highlighting stability in upstate New York housing markets. The authors say there was little nonprime lending in upstate New York and other areas that avoided boom and bust.

“It is likely that causation runs in both directions – an increase in nonprime lending led to more significant home price appreciation [in boom areas], and more rapid home price appreciation led to a rise in nonprime lending,” the authors wrote in the recent report.

Source: The Wall Street Journal, Phil Izzo (03/30/2010)

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