The checkerboard economy

Over the next several years our economy is expected to become a crazy quilt made up of regional patches of prosperity and decline, based on local susceptibility to the recent epidemic of housing fever (Janet Morrissey, InvestmentNews):

"Housing is a very local business," said David Goldberg, an analyst with UBS Securities LLC in New York. Although certain issues are affecting housing demand nationwide, "recovery and timing of recovery" are going to be much more locally driven, he said.

"We believe Texas; Charlotte, N.C.; and Atlanta will be among the first to recover," Mr. Goldberg said. On the flip side, he added that Florida, inland California, Phoenix and Las Vegas will likely lag the rebound. [...]

A report issued in May by New York-based RREEF Alternative Investments, the asset management branch of Deutsche Bank AG of Frankfort, Germany, made similar predictions about an earlier recovery for Texas and the city of Washington but added a few other markets as well. It also named Baltimore, Boston, Charlotte, Chicago, Portland, Ore., Raleigh, N.C., San Francisco, San Diego, San Jose, Calif., Seattle and the New York/ New Jersey corridor as housing markets able to clear out their housing inventory within a two-year horizon.

"There could be some attractive opportunities in these markets, where the turnaround horizon is relatively short," the report said. Markets that will take more than three years to rebound include Miami, Jacksonville, Orlando, Palm Beach and Tampa, Fla., Las Vegas, Phoenix, and Riverside and Sacramento, Calif., according to the report.

Some financial advisors are recommending that clients who are looking to relocate should consider the early-recovery markets first.

Unfortunately, the fever that gripped south Florida and similar areas will have a depressive effect on those areas for at least several years, as affluent families choose to avoid the specific regions that lag behind the housing recovery.