I think this hits the nail on the head. Baltimore is the standout city remaining a the top of the big-city pack with current prices having regressed only to 2006....DC is back to 2004, Phoenix to 2000, and Detroit to 1995! There are no fundamentals obvious to me that account for this anomaly.

Sellers beware - there is no floor beneath you. Sell now, or be prepared to party like it's 1999!

This is the tip of the iceburg. In fact that is probably an understatement. The United States is about to experience an unprecedented shift in demographics between 2005 and 2030, one that will affect housing markets in significant ways, especially in the area of multifamily housing, particularly smaller rental units. Increasing numbers of empty-nest seniors and single-person households without children will dominate. Minority household growth will nearly triple that of white, or non-Hispanic, households. In other words, households as we move toward 2030 will become older and more racially diverse. In fact, the age group 65+ will experience a 96.6% increase--45.5% of the overall share of change. At the same time, seniors share an affinity for the same type of housing as the second-largest share of the growth: the single-person household in the 25-35-year old range. What kind of housing do they favor? Smaller units in mutli-family arrangements. Demand for rental housing will also increase as lending markets return to more conventional methods of home financing, thereby all but shutting out sub-prime borrowers. Preference for rentals will also be strengthened by fear of recent events in the nation's real estate markets. Rising energy prices will bolster this preference, because even modest economic recovery will result in skyrocketing oil prices as a result of increased global competition for energy resources, and it is likely this will occur even without signs of economic recovery. As a result, families will seek to congregate in denser, urban areas. Acting on these preferences in most places, however, is illegal because of zoning laws that do not allow them anywhere in the United States. Therefore, cities will need to rewrite existing codes to keep pace with consumer demand. However it is highly likely that single-family detached homes will continue to be overbuilt relative to the emerging demand. Currently supplies of such suburban homes already dramatically exceeds projected future demand, even in the near-term, so prices are likely to plummet dramatically in suburban areas resulting in a cycle of disinvestment. It is well known, though generally only shared privately, that economic recovery will be impossible without dramatic de-valuing of larger suburban properties in sprawling and rural areas. Similarly, urban areas will likely experience a period of explosive dense growth, and spiraling prices, further exacerbated by outdated zoning codes that limit builder's capacity to keep up with pent-up demand for smaller mult-family arrangements, particularly those in walkable urban areas served by fixed-rail transit and multi-purpose paths. All of this does not even begin to account for dramatic changes in tastes favoring urban living arrangements as indicated by polls of young singles, and declining interest in and/or capacity for automobile ownership among all the top-trending demographic groups.

Cities that see the greatest benefit from future demographic trends will likely be those oriented towards government (Washington DC), government contracting such as defense (ex. Houston), and Health Care and Business Services (Baltimore is well-situated).

Before Baltimore can even think about using the trend described by Lee Watkins to their advantage, Business's need to be headquartered in Baltimore. Granted there are a few big Names like UA and Legg Mason, the city rules make it unattractive to put roots in the city, the companies are better off going to the County. The city has to fix that, and upgrade the Public Trans, which needs it, I used to ride every day to work when I lived in AA County. Fix the business laws & upgrade & expand the public trans & Baltimore is sitting pretty good.

I dont care how business friendly you make BCity. Until you plow the endless sea of vacant and crime ridden row homes, there will be no revival.

The relatively level tail end of their graph looked suspect. The first paragraph of their methodology explanation sounds as if it was written by Lawrence Yun. The meat of their explanation doesn't start until the second to last paragraph (like a true mortgage/RE pro, burying the important stuff under the meaningless stuff): "Since all the properties do not sell, a model must be created to price all of the major attributes of a house."

They are not measuring the prices of home sales. They are making up home values and assigning them to homes that have not sold.

This is level III asset evaluation known as mark to model, or "mark to fantasy."

Mark to market= level I. How much is a frequently traded stock worth? Look to its most recent sale on the stock market.

Mark to matrix= level II. Less liquid, less frequently traded, but frequent enough to develop a rigid frame matrix.

Mark to model= level III. You haven't the foggiest idea so you're going to make up something that sounds good.

When observed reality doesn't jive with your world view, just make a model. It's how well papered fools like Mark Zandi claim that paying a man not to work doubles prosperity.