According to the National Association of Realtors, the recent large run-up in median house prices in the United States bypassed much of the Midwest, especially Ohio. Of the 158 U.S. metro areas tracked, 20 have the dubious distinction of having a negative change in median single-family house prices since 2004. I have listed those 20 metro areas below. Of those 20, 15 are in the Midwest. All of Ohio's population centers are represented in the list, even those cities not particularly reliant on industry, such as Columbus.
|Metropolitan Area||Q4 2006 Single- Family Median Price||Change From Year Ago Quarter||% Change From Year Ago Quarter||Change From 2004|
|Barnstable Town, MA||373.5||-31.7||-7.8%||-3.7|
|Youngstown-Warren- Boardman, OH-PA||80.0||-6.7||-7.7%||-6.0|
|Grand Rapids, MI||129.5||-5.6||-4.1%||-3.4|
|Cedar Rapids, IA||129.2||-4.6||-3.4%||-0.3|
|South Bend-Mishawaka, IN||89.8||-0.1||-0.1%||-3.8|
One of the important aspects of home ownership that is not always discussed in detail is that the effective cost of living in a house is impacted by the rise or fall of the price of the house. To arrive at the effective cost, take the carrying cost of the house -- mortgage plus insurance and maintenace -- and add the net change in house prices. For a person owning a median-priced house in Columbus ($147,000 in 2004), the monthly carrying cost may have been modest, but since 2004, he also absorbed a non-cash cost of $8,000 due to house prices falling, or about $270 per month. That's a lot of money.
Meanwhile, a person owning a median-priced house in Washington, D.C. ($340,000 in 2004) paid hefty carrying costs, but received a non-cash benefit of $82,000 due to price appreciation, or about $2,700 per month. On a net basis, he was paid to live in the Washington area. It hardly seems fair that a place like Columbus is kicked while it's down at the same time that a place like Washington is doubly-rewarded for good times, but that's essentially what happens.
The trend over the past couple of decades has been a slow migration away from the Midwest to the South and West. This leaves the Midwest in a precarious position. It must work hard to increase its attractiveness. The margin to err is small. In particular, the state leadership in Ohio has been poor over the last decade, which put Ohio at the mercy of the kicking boot. As a Republican, it pains me to admit that the GOP was mostly in charge during this period.
Another trend in the Midwest is a slow migration away from rural areas to suburban/urban areas. Because of this trend, living in a rural area that is not within commuting distance of a major city is more expensive than it seems at first blush.
Note: It's odd that immigration tends to be unpopular in rural areas, since these areas probably would benefit the most from it. In these areas, it would be easy for an immigrant to buy a median-priced home because the carrying costs are so low. There are some exceptions to the rule of immigration to rural areas. The meat packing and labor-intensive agriculture industries have attracted immigrants to rural areas, for instance.