Buffalo is one of the strongest-performing of the nation's 100 largest metropolitan areas based on housing prices, a low level of foreclosed properties and its employment in the second quarter, but its overall economic output remains weak, according to a new report.
The report by the Brookings Institution's Metropolitan Policy Program, being released today, paints a positive picture of Buffalo's housing market and its most recent jobs situation.
That reinforces the perception that the region dodged the worst of the housing bullet, since it never faced either a pricing boom or a bust. And local employment conditions held steady in the most recent quarter, even as other parts of the country shed jobs.
"Overall, the story is relatively positive for Buffalo," said Brookings research fellow Jennifer Vey. "While its unemployment rate has climbed during the recession, it's lower than the national average, and the housing market is relatively stable. It demonstrates that its diversified economy has probably helped them through the recession."
But it also demonstrates that the region has a ways to go in picking up the pieces of an overall economy that has long struggled to pull out of the doldrums.
That puts it in the same league as most other metro areas in the Great Lakes region, where economic output levels "are comparatively low," with every metro area reporting a worse-than-average decline in "gross metropolitan product" since the peak, Vey said. In turn, she said, that suggests that inflation-adjusted wages in those areas fell, probably due to the loss of well-paying manufacturing jobs.
"Buffalo is not alone in this," Vey said. "It does fit in. It's experiencing similar patterns as a lot of these other metros."
According to Brookings' MetroMonitor, the Buffalo-Niagara Falls metropolitan area ranked No. 4 in the country for one quarter's change in employment, a year's change in housing prices and the number of foreclosed homes for every 1,000 homes, respectively.
From its peak in the third quarter of 2008, the region's employment level fell by 2.8 percent, ranking the area 31st by that measure. But that rate is still better than a 3.8 percent average drop for the 100 largest cities, or a 4.1 percent average drop for the entire nation.
And it's one of only six metro areas that didn't lose jobs in the second quarter. Employment in Akron, Ohio; Columbia, S.C.; and McAllen, Texas, rose a bit. Buffalo; Madison, Wisc.; and Austin, Texas, held steady.
Similarly, it came in 30th for the change in inventory of "real estate owned," or foreclosed homes, rising by 0.07 percent to 0.95 percent for every 1,000 homes that could be mortgaged. But that's better than rising 0.33 percent for the average of the 100 cities, or rising 0.28 percent for the entire nation.
"It does show that the housing market has been relatively stable, which might help to offset some of the pain from unemployment that does exist in the region," Vey said.
However, for one quarter's change in gross metropolitan product -- the overall measure of local economic output -- Buffalo ranked 71st, with a 0.5 percent drop, worse than the average for the 100 cities or the nation. And it's 48th for the change in GMP since peaking in the third quarter of 2007, with a 4.1 percent drop, compared to average declines of 3.7 percent for other cities and 2.8 percent for the country.
Overall, the institution noted in its report, the nation lost nearly 1.3 million jobs in the second quarter, pushing the unemployment rate to its highest in more than 15 years, at 9.5 percent.
But the pace of economic decline slowed in most cities, as the gross domestic product -- which measures overall economic output -- fell by an annual rate of 1 percent, compared to 6.4 percent during the first quarter. And sales of new and existing homes rose during the spring, indicating stabilization in the national housing market.
"The American economy continued to weaken during the months of April, May and June 2009, but it was no longer in freefall," the Brookings researchers concluded.
The 20 best-performing cities saw average employment losses of 1.7 percent from their peaks, while 17 saw home prices rise in the past year. But the 20 weakest areas witnessed employment drops of 8.2 percent on average, while home prides fell an average 11 percent in a year.
Around the country, 20 metro areas reported at least small increases in economic output from the first quarter, while the rest saw output fall more slowly than from January to March. Only three had signs of a full recovery in output.
Housing stabilized in more areas, with 42 seeing increases in home prices from June 2008 to June 2009, compared to 37 in the first quarter. But Florida, Arizona and inland California still suffered "stark" price drops and high rates of foreclosures.
The areas with the strongest overall economic performance during the recession are mostly from the middle of the country and parts of the inland Northeast and upper Southeast. The weakest areas were largely in Florida, inland California and the Great Lakes areas.
Cities more dependent on the auto industry were weaker, while areas with specializations in higher education or health care and in some type of non-auto manufacturing did better.
Interestingly, Rochester was among the top 20 metro areas, and the only one in New York State. Pittsburgh and Harrisburg made the list from Pennsylvania. But no New England cities were on top. On the other hand, Texas had six cities among the top 20.
Among the weakest 20, eight were in Florida, three each were in California and Ohio, and two were in Michigan.