We've got a tale of two markets here, said John Tashjian, principal of Centurion Real Estate Partners, which owns residential and office buildings in Manhattan and California. Now, more than ever, we're seeing a separation between the haves and have-nots in terms of geography.
The most robust cities are those with strong local economies and high demand, said Tashjian. The S&P/Case-Shiller Housing Index reported Tuesday that in April, prices in San Francisco rose 3.4 percent, Washington, D.C., rose 2.8 percent, Boston rose 0.9 percent, Miami rose 0.4 percent and New York rose 0.1 percent. Each city has been insulated from the lackluster national job market and, particularly in the case of New York's Manhattan and Miami's South Beach, attracted foreign buyers seeking stable investments. This demand has led to low inventory and price increases.
You have to look at what the demand generators are, said Tashjian. The U.S. is on sale.
But the rest of the country lacks the cachet of premier cities, and Monday's new home sales data, provided by the U.S. Commerce Department, supports the idea of disparity. New home sales in the Northeast region surged 36.7 percent and sales in the South rose 12.7 percent. In contrast, new home sales fell 3.5 percent in the West and 10.6 percent in the Midwest.
The economy is still bad, said Tashjian. Let's not call it a comeback just yet.
And while new home sales were up, they account for only around 7 percent of the market. Existing home sales, the bulk of housing, were down 1.5 percent to a seasonally adjusted annual rate of 4.55 million in May, according to the National Association of Realtors. And existing home sales remain far below the peak level of around 7 million.
A true housing recovery will not occur without sustained job growth, an improvement that Tashjian doesn't expect for at least a year.