Report Reveals Wide Gap Between Successful and Struggling Communities, Reshaping American Landscape

NEW YORK, Feb. 26, 2014 /PRNewswire/ -- According to a comprehensive new report, there is a startling contrast in economic prosperity between successful and struggling American communities. America is divided into nine different community profiles, ranging from the successful — the "Affluent Metroburbs" — to the genuinely troubled — the "Endangered Communities." Fifty percent of the American communities studied are struggling to find their way forward after the Great Recession.

Released today by The Demand Institute, a non-advocacy, non-profit think tank jointly operated by The Conference Board and Nielsen, "A Tale of 2000 Cities: how the sharp contrast between successful and struggling communities is reshaping America" finds that a large proportion of housing wealth is concentrated in a relatively small proportion of America's cities, towns and villages. Of the 2,200 analyzed, the top 10 percent ranked by the aggregate value of their owner-occupied homes held 52 percent ($4.4 trillion) of the total housing wealth. The bottom 40 percent held just eight percent ($700 billion).

 "A Tale of 2000 Cities" examines the overall economic health and wellbeing of American communities primarily through the lens of housing market dynamics, since housing is often a family's most valuable and visible economic asset. This analysis is supplemented with proprietary economic and consumer research. The report is the result of an 18-month intensive research program that included an analysis of 2,200 cities and towns in America coupled to in-depth interviews with 10,000 U.S. consumers. The findings offer insight into both the health of the country's communities and the health of the U.S. housing market to help government and business leaders shape policies, strategies and investment decisions.

"The strength of the local housing market is among the most telling metrics that helps us assess community health and wellbeing. The home is often a family's single most valuable and visible economic asset, and the housing in a community is a very reliable gauge of its prosperity. Drive through any American town, city or village and you can readily judge how well the community is faring by the types of property, their size and condition," said Louise Keely, Chief Research Officer at The Demand Institute, and co-author of the report.

According to the new report on the state of American communities, the housing market recovery will be drastically uneven over the next five years, providing both challenges and opportunities. Over the next five years the median price of existing single-family homes will be close to the peak reached in 2006 before the housing market crashed. Adjusted for inflation, it will stand 25 percent below the peak. Despite these modest average gains, price rises will be more than three times greater in the strongest markets than in the weakest ones.

"Housing is an important financial barometer for the larger U.S. economy, and a more nuanced social barometer for families and towns," said Kathy Bostjancic, director of macroeconomic analysis at The Demand Institute, and co-author of the report. "The housing trends analyzed in this report paint a powerful picture of how the Great Recession has impacted Americans in the short-term, and illuminate the potential long-term effect on our country."

Additional highlights from "A Tale of 2000 Cities" include:

• Double-digit increases in the price of U.S. homes in the past two years are not indicative of future trends. They were largely driven by investors buying up swaths of distressed homes to meet growing rental demand.
• Over the next five years, home prices will accordingly grow at a much slower rate. The Demand Institute forecasts existing single-family median home prices will grow at an average annual rate of 2.1 percent between 2015 and 2018 as supply and demand move into a sustained equilibrium.
• There will be significant variations among all 50 states and the largest 50 metropolitan areas in the next five years. Price rises will be more than three times greater in the strongest markets than in the weakest ones.
• There are opportunities for national and local policy makers to support and amplify success stories from the strongest and most vibrant communities, while simultaneously considering interventions to strengthen struggling communities.

The report can be downloaded at The Demand Institute's website: demandinstitute.org/2000cities/report.
A corresponding data visualization can be found here: demandinstitute.org/2000cities/explore. 

About The Demand Institute
The Demand Institute illuminates how consumer demand is evolving around the world. We help government and business leaders align investments to where consumer demand is headed across industries, countries and markets. A non-advocacy, non-profit organization and a division of The Conference Board, The Demand Institute holds 501(c)(3) tax-exempt status in the United States and is jointly operated by The Conference Board and Nielsen. For more information, please visit demandinstitute.org.

About The Conference Board
The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world's leading organizations with the practical knowledge they need to improve their performance and better serve society. The
Conference Board is a non-advocacy, not-for-profit entity holding 501 (c)(3) tax-exempt status in the United States. For more information, visit conference-board.org.

About Nielsen
Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and related properties. Nielsen has a presence in approximately 100 countries, with headquarters in New York City and Diemen, the Netherlands. For more information, visit nielsen.com.

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SOURCE The Demand Institute