Story of Recovery Will Lack Uniformity: Demand Institute

While the U.S. housing market appears to be on the road to recovery, it will be a rather patchy one, with some regions seeing home prices rise as high as 5 percent and others falling flat, according to a report released from the ""Demand Institute"":http://www.demandinstitute.org, which is jointly operated by ""The Conference Board"":http://www.conference-board.org/ and ""Nielsen"":http://www.nielsen.com/content/corporate/global/en.html.

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While research from the nonprofit led to the projection for home prices to ""rise by 3 to 3.5 percent"":http://dsnews.comarticles/demand-institute-predicts-recovery-will-occur-in-two-phases-this-year-and-2015-2012-05-15 between 2015 and 2017 nationwide, the pace of recovery will still vary by location.

According to the report, three variables will indicate the speed of recovery for individual states: state-level unemployment rates, the proportion of foreclosure inventory relative to total inventory, and the extent of recent price declines.

States that seem set to begin recovery based on those variables are the Dakotas, Montana, and Nebraska, and Virginia. States that are expected to move along more slowly are Florida, Nevada, New Jersey, and Illinois. And of course, within the states are specific areas that are expected to flourish faster.

After analyzing the different ways in which recovery could occur, the study discovered four segments.

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The ""Resilient Walkables"" are a segment covering about 15 percent of the population and will be the first to recover, according to the report. Home prices weren't affected as dramatically for ""Resilient Walkables,"" falling by less than the national average between 2006 and 2011. The report listed Boston and some of its closer suburbs as an example, as well as Brookline and Cambridge; Philadelphia; some Washington, D.C. suburbs; and Denver along with some of its suburbs. These areas are projected to see prices rise by up to 5 percent a year between 2014 and 2017.

About 35 percent of the population lives in areas considered to be in the ""Slow and Steady"" category. This segment is the next in line to recover and will do so at a pace that is faster than average. Gaithersburg, Maryland; Charlotte, North Carolonia; and Dallas and Fort Worth are all in this group where price are projected to increase 3 percent in 2014, and similar gains should continue in the following three years.

The ""Damaged but Hopeful"" segment holds 30 percent of the population, and includes neighborhoods characterized by high foreclosure inventory, a restrictive foreclosure process, and medium to high levels of unemployment. Prices fell at the national average, and recovery is predicted to be slower than the national average. This segment includes Chicago and its more walkable suburbs; San Diego; and Stamford, Connecticut.

The ""Weighed Down"" segment includes 20 percent of the population. Higher than average price declines, higher than average unemployment, more thinly populated localities â€" these are some of the traits of the segment expected to recover the slowest. Prices are not projected to reach the national average by 2017. Among the areas expected to fall behind others in terms of speed of recovery include some of the outer suburbs of Chicago, some of the smaller suburbs of major metropolitan areas in Florida, such as Tampa and Orlando; some of the smaller suburbs of Tucson and Phoenix in Arizona; and some cities in Nevada that are not in the Las Vegas or Reno metropolitan areas.

The Demand Institute illuminates how consumer demand is evolving to strengthen the growth and vitality of the global economy.