Rochester #20 in top metro US economies

http://images.businessweek.com/ss/09/10/1022_40_strongest_us_metro_economies/index.htm

By Prashant Gopal Prashant Gopal – Fri Oct 23, 8:08 am ET
America's strongest economies have one thing in common -- home prices that never got too hot or too cold.

Home prices in metros such as San Antonio, Oklahoma City, Pittsburgh, Rochester, Little Rock, Ark., and Baton Rouge, La., remained steady through boom and bust. Although no metropolitan area entirely avoided the economic downturn, the most resilient metros were protected by a potent mix of recession-resistant jobs.

The upstate New York areas of Syracuse, Rochester, Albany, and Buffalo suffered from declining jobs in manufacturing, but got significant boosts from sizable health-care, education, and government sectors. Construction is booming in Baton Rouge, Louisiana's capital, as firms take advantage of financing for post-Katrina hurricane recovery work and service-related companies expand to meet the needs of a growing population. Omaha and the state of Iowa have relatively strong insurance sectors.

Texas, the last state to enter recession, has been bolstered by its oil and gas industries -- which have also helped Oklahoma, North Dakota, and Louisiana. Texas also has many other things going for it, including affordable home prices and relatively low wages, which attract corporations.

BusinessWeek.com used data and analysis from the Brookings Institution's new MetroMonitor to come up with the nation's 40 strongest economies. The MetroMonitor, which measures the nation's health on a quarterly basis, ranks the top 100 metros based on job growth, unemployment, gross metropolitan product, and home prices.

A relative boom in Baton Rouge

"No place has been untouched by this recession. This is a change from previous recessions," said Alan Berube, a senior fellow and research director of the Brookings Metropolitan Policy Program. "But there's a big difference in losing one-tenth of a percentage and losing 15% of jobs."

Baton Rouge, which was ranked No. 6, "grew jobs every month until August 2009 and in August it only lost nine-tenths of a percent, compared to 5.1% nationally," said Lauren C. Scott, professor emeritus of economics at Louisiana State University.

Scott said $5.1 billion of construction projects have been announced or are under construction in the Baton Rouge metro, including a new plant for French chemical company SNF and the expansion of an ExxonMobil (NYSE:XOM - News) chemical plant.

"One nice thing after another thing happened that has countered what's happening in the rest of the country," Scott said.

Ernie Goss, an economist at Creighton University in Omaha, who studies much of the nation's energy and farm belts, said the strong dollar early this year hurt farm exports. "But the dollar has now weakened significantly and that will be good for the farm sector and energy commodities," Goss said. "I think 2010 is going to be much better than 2009. But we are still not going to have a lot of job gains.

A 22-year unemployment high in Texas

Although the metros in the ranking are strong by relative standards, their unemployment rates in many cases are now peaking because they entered the recession late. Texas, which had 5 metros in our top 10, including No. 1 San Antonio, is a good example.

The unemployment rate in Texas hit 8.2% in September, rising above 8% for the first time in 22 years. But that's a very low unemployment rate, compared to the national rate of 9.8% or to Nevada's 13.3% rate.

Texas is unlikely to face a prolonged downturn, said Terry Clower, an economist at the University of North Texas. The state's affordable cost of living make it attractive to new residents and corporations, the largest of which tend to be based near Houston and Dallas.

"It's perceived as a low-cost place to do business," Clower said. "Because housing is affordable, the wage rates reflect that."

Marisa Di Natale, a director at Moody's Economy.com, said late arrivals to the recession will generally face mild downturns.

These metros "haven't had a big erosion in housing wealth, which has kept consumer spending stronger than it would otherwise be," Di Natale said.



Source: The Brookings Institution's MetroMonitor
By Prashant Gopal

Employment and Economic Muscle
Federal Reserve Chairman Ben Bernanke might think the country is out of the recession, but unemployment is rising from Connecticut to California and banks are taking possession of a growing share of American homes. But some metros across the nation have managed to stay out of the recession's path and could now be poised for recovery. Using data and analysis from the Brookings Institution's new MetroMonitor study, BusinessWeek.com ranked the nation's top 40 economies based on job growth, employment, economic growth, and home prices. And Texas seems to be the clear winner with San Antonio at the top of the list and five metros in the top 10. To see which metros made the list, read on.

The Brookings Institution ranked the 100 largest metros by averaging the ranks for four key indicators: employment change, unemployment change, gross metropolitan product, and home price change. Employment was measured by the change from the peak quarter for each metro to the second quarter of 2009. The peak was the quarter in which the metro had the most jobs during the past five years. Unemployment was ranked by measuring the percentage-point change from the first quarter of 2009 to the second quarter of 2009. Gross metropolitan product was measured from the peak quarter to the second quarter of 2009. And the ranking of home prices compared the second quarter of 2009 to the previous quarter. The employment data were provided by Moody's Economy.com, the unemployment data were collected from the U.S. Bureau of Labor Statistics, and the home price index came from the Federal Housing Finance Agency.
Source: The Brookings Institution's MetroMonitor

Rochester, NY
Overall rank: 20
The Rochester metropolitan area, near Lake Ontario, is home to Eastman Kodak and the University of Rochester. Employment in the Rochester metro peaked in the third quarter of last year. Gross metropolitan product in the fourth quarter was down 5% from the peak in the fourth quarter of last year. Home prices grew 3.1% in the second quarter compared with the same period a year earlier. And the unemployment rate in June was 8.4%, up 3.1 points from a year earlier. (Please see below for the various criteria used by the Brookings Institution to determine the overall ranking.)

Job growth (since peak) rank: 10
Gross Metro Product (since peak) rank: 67
Unemployment change (year over year) rank: 32
Home price change (year over year) rank: 9
 
Last edited:
I got the below from Moody's. Pretty much sums up Buffalo and Rochester:


"Rochester’s recession will be a relatively mild
one in relation to the rest of the nation and compared
with past downturns in the metro area.
Manufacturing will be the biggest weight on the
economy, but construction also will continue to
fall amid a static housing market and little commercial
development. The best growth prospects
are related to the growing healthcare and education
industries, which are attempting to retain
graduates of local universities. In the long run,
the metro area will underperform because of its
cold climate, weak population growth, and inability
to retain young, well-educated workers."
 
more encouraging news

more encouraging news

http://customsites.yahoo.com/financ...-2-5-cities-positioned-for-a-housing-recovery

Housing: Best Recovery Bets
Les Christie
Wednesday, October 21, 2009
Check the Housing Prices Forecast for Your Area
at CNNMoney.com
This article is part of a series related to being Financially Fit
The average home price is forecast to plummet over the next two years. But these 5 cities are predicted to post gains.

1. San Francisco

Median home price: $675,000
Value lost since 2006: 25.7%
Forecast gain by 2011*: 4.8%


The San Francisco metro area has seen its home values drop by a quarter, and the city still has some pain to work through. The city's median home price is expected fall another 8.3% by June 2010.

After that, however, the market there may come roaring back: Fiserv predicts a 14.3% gain between June 2010 and June 2011. Averaged out, that means a 4.8% gain over the next two years.

One reason for the sharp comeback is that much of the area's excess inventory will have been sold. It's already dropped by nearly in half over the past year.

The recovery will be delayed, though, as the area -- particularly Oakland and the East Bay -- works through its foreclosure problems. During the first six months of 2009, one of every 52 homes had at least one foreclosure filing.

The good news, according to Mark Fleming, chief economist for First American CoreLogic, is that core city neighborhoods don't have nearly as many foreclosures as those out on the fringe. The steady demand in those communities will serve as a base as other neighborhoods rebuild.


2. Seattle

Median home price: $371,000
Value lost since 2006: 15.2%
Forecast gain by 2011*: 3.8%


Seattle has become a world-class city with a diverse, vibrant economy. As a home to manufacturers such as Boeing and software providers such as Microsoft, the job market has held up better than average, with a current unemployment rate of 8.8%.

Home prices had a softer landing as well, dropping just 15.2% over the past three years, about half the national average. However, prices do tend to be volatile, according to Mark Fleming, chief economist for First American CoreLogic. The lack of available land for development is one reason for that volatility, as are political restrictions on growth.

After another modest price decline of 2.3% in the next eight months, the market should begin to turn up. Between June 2010 and June 2011, the city should see a gain of 6.2%. Averaged out, that means a 3.8% gain over the next two years*.

And while that may not sound all that robust for those jaded by the annual double-digit returns recorded during the boom, that performance will be one of the best of any large city during that period.


3. Pittsburgh

Median home price: $122,000
Value lost since 2006: 0.8%
Forecast gain by 2011*: 2.2%


Pittsburgh's main problem has been a brain drain. The metro area has been losing residents for years: Its population shrank 3% since the 2000 census, and the core city of Pittsburgh has lost almost half its population over the past 50 years. But that worked in Pittsburgh's favor when it came to real estate. There was no shortage of housing during the boom years, which helped keep a heavy lid on housing prices. Homebuyers never had to resort to exotic mortgages just to buy a starter place.

There are few barriers to entry for homebuyers here, according to Mark Fleming, chief economist for First American CoreLogic. As a result, Pittsburgh's foreclosure rate has been running at about half the national average.

Meanwhile, the area's economy has transitioned from steel to services, finance, bio-med, health care and other more sustainable industries. This diversification has enabled the area to muddle through the recession with less angst than many other places. "It's where we would like to see Detroit go through over the next decade," said Fleming. The unemployment rate for the metro area is a modest 7.9%.

Once the national recovery begins in earnest, the housing market should start to record moderate gains. Fiserv predicts a home price rise of 0.5% by June 2010 followed by a 1.7% increase in the following 12 months. Averaged out, that means a 2.2% gain over the next two years.*


4. Rochester, NY

Median home price: $119,000
Value lost since 2006: 5.2%
Forecast gain by 2011*: 2.2%


Like Pittsburgh, Rochester has had to reinvent itself. Old economy companies like Eastman Kodak and Xerox have lost much of their importance and reduced their workforces.

The slack has been picked up by such newer companies as Paychex, a successful payroll-service company headquartered there, as well as high-tech optical companies. The current unemployment rate of 8.1% is was well below the national average of 9.6%.

Rochester is also a learning center with the University of Rochester, which hosts both the foremost optics research center in the nation and the Eastman School of Music, a premiere music institution. A few years ago, the university surpassed Kodak as the city's largest employer, with more than 17,000 workers. Another notable outpost of academia is the Rochester Institute of Technology and there are several smaller colleges.

Rochester home prices never bubbled during the boom, but they have enjoyed slow, steady growth during the bust, gaining 5.2% over the past three years*. Since many of the area's jobs pay reasonably well (the median household income is $63,000, which is above the national median), the relatively affordable housing market has been open to most of the population.

The prices also meant few homebuyers resorted to toxic mortgages, and New York's strong consumer protection laws tended to discourage predatory lending. As a consequence, Rochester has been less burdened by foreclosures than most big markets. Only one property for every 276 had a foreclosure filing against it during the first six months of 2009, about a third the national rate.




5. Memphis, Tenn.

Median home price: $108,000
Value lost since 2006: 19.9%
Forecast gain by 2011*: 1%


The Memphis metro area boasts some of the most affordable housing in the country -- and it grew considerably cheaper during the past few years, falling nearly 20%.

That downturn will continue for another year or so, with prices declining another 1.2% before rebounding 2.2% during 2011. Averaged out, that means a 1% gain over the next two years*.

The economy here has always been tied to the city's position on the Mississippi and, more recently, the intersection of several railroad lines and two major interstates.

Those factors, plus a business-friendly environment, helped attract such heavy hitters as FedEx and AutoZone, a Fortune 500 autoparts retailer. "Memphis," said Mark Fleming, chief economist for First American CoreLogic, "is perfectly positioned for distribution nationwide."

Still, unemployment in the metro area has been a problem lately, with the rate rising to 10.4% in August.

The metro area has been growing steadily in population since the 2000 census, up nearly 7%. The added demand for housing should support home prices, although land in the city's far-flung exurbs can be purchased and developed quite reasonably. The competition from new home builders tends to keep a tight lid on the gains of existing home prices.
 
Back
Top