America's Most Miserable Cities, 2011

Kurt Badenhausen, Forbes.com
Feb 2, 2011
http://realestate.yahoo.com/promo/americas-most-miserable-cities-2011.html

Arnold Schwarzenegger was sworn in as the governor of California at the end of 2003 amid a wave of optimism that his independent thinking and fresh ideas would revive a state stumbling after the recall of Gov. Gray Davis.

The good vibes are a distant memory: The Governator exited office last month with the state facing a crippling checklist of problems including massive budget deficits, high unemployment, plunging home prices, rampant crime and sky-high taxes. Schwarzenegger's approval ratings hit 22% last year, a record low for any sitting California governor.

California's troubles helped it land eight of the 20 spots on our annual list of America's Most Miserable Cities, with Stockton ranking first for the second time in three years.

Located in the state's Central Valley, Stockton has been ravaged by the housing bust. Median home prices in the city tripled between 1998 and 2005, when they peaked at $431,000. Now they are back to where they started, as the median price is forecast to be $142,000 this year, according to research firm Economy.com, a decline of 67% from 2005. Foreclosure filings affected 6.9% of homes last year in the Stockton area, the seventh-highest rate in the nation, according to online foreclosure marketplace RealtyTrac.

Stockton's violent crime and unemployment rates also rank among the 10 worst in the country, although violent crime was down 10% in the latest figures from the FBI. Jobless rates are expected to decline or stay flat in most U.S. metro areas in 2011, but in Stockton, unemployment is projected to rise to 18.1% in 2011 after averaging 17.2% in 2010, according to Economy.com.

"Stockton has issues that it needs to address, but an article like this is the equivalent of bayoneting the wounded," says Bob Deis, Stockton city manager. "I find it unfair, and it does everybody a disservice. The people of Stockton are warm. The sense of community is fantastic. You have to come here and talk to leaders. The data is the data, but there is a richer story here."

There are many ways to gauge misery. The most famous is the Misery Index developed by economist Arthur Okun, which adds unemployment and inflation rates together. Okun's index shows the U.S. is still is in the dumps despite the recent gains in the economy: It averaged 11.3 in 2010 (blame a 9.6% unemployment rate and not inflation), the highest annual rate since 1984.

Our list of America's Most Miserable Cities goes a step further: We consider a total of 10 factors, things that people gripe about around the water cooler every day. Most are serious issues, including unemployment, crime and taxes. A few we factor in are not as critical, but still elevate people's blood pressure, like the weather, commute times and how the local sports team is doing.

One of the biggest issues causing Americans angst the past four years is the value of their homes. To account for that we tweaked the methodology for this year's list and considered foreclosure rates and the change in home prices over the past three years. Click here for a more detailed rundown of our methodology.

Florida and California have ample sunshine in common, but also massive housing problems that have millions of residents stuck with underwater mortgages. The two states are home to 16 of the top 20 metros in terms of home foreclosure rates in 2010. The metro area with the most foreclosure filings (171,704) and fifth-highest rate (7.1%) last year is Miami, which ranks No. 2 on our list of Most Miserable Cities.

The good weather and lack of a state income tax are the only things that kept Miami out of the top spot. In addition to housing problems (prices are down 50% over three years), corruption is off the charts, with 404 government officials convicted of crimes this decade in South Florida. Factor in violent crime rates among the worst in the country and long commutes, and it's easy to understand why Miami has steadily moved up our list, from No. 9 in 2009 to No. 6 last year to the runner-up spot this year.

California cities take the next three spots: Merced (No. 3), Modesto (No. 4) and Sacramento (No. 5). Each has struggled with declining home prices, high unemployment and high crime rates, in addition to the problems all Californians face, like high sales and income taxes and service cuts to help close massive budget shortfalls.

The Golden State has never looked less golden. "If I even mention California, they throw me out of the office," says Ron Pollina, president of site selection firm Pollina Corporate Real Estate. "Every company hates California."

Last year's most miserable city, Cleveland, fell back to No. 10 this year despite the stomach punch delivered by LeBron James when he announced his exit from Cleveland on national television last summer. Cleveland's unemployment rate rose slightly in 2010 to an average of 9.3%, but the city's unemployment rank improved relative to other cities, thanks to soaring job losses across the U.S. Cleveland benefited from a housing market that never overheated and therefore hasn't crashed as much as many other metros. Yet Cleveland was the only city to rank in the bottom half of each of the 10 categories we considered.

Two of the 10 largest metro areas make the list. Chicago ranks seventh on the strength of its long commutes (30.7 minutes on average--eighth-worst in the U.S.) and high sales tax (9.75%---tied for the highest). The Windy City also ranks in the bottom quartile on weather, crime, foreclosures and home price trends.

President Obama's (relatively) new home also makes the cut at No. 16. Washington, D.C., has one of the healthiest economies, but problems abound. Traffic is a nightmare, with commute times averaging 33.4 minutes--only New York is worse. Income tax rates are among the highest in the country and home prices are down 27% over three years.

And it does not get much more miserable than the sports scene in Washington. Beltway fans should be grateful for the NHL's Capitals, their only major pro team to finish out of the basement in the last two seasons. The Nationals (MLB), Redskins (NFL) and Wizards (NBA) have all finished in last place in their respective divisions the past two years.

America's Five Most Miserable Cities

No. 5: Sacramento, Calif.
No state taxes $50,000 of income like California, with a rate of 9.55% for that middle-class tax bracket. Sacramento is a one-team sports town, and that team has been awful in recent years. The NBA's Kings have won just 26% of their games the past two-plus seasons.

No. 4: Modesto, Calif.
The median home was valued at $275,000 in 2006; today it is $95,000. And don't leave your car on the street in Modesto, where 3,712 vehicles were stolen in 2009, making for the second-highest auto theft rate in the country. It ranked first in four of the previous five years.

No. 3: Merced, Calif.
The economic downturn and busted housing market hit Merced harder than any other area in the country. Average unemployment of 16.2% since 2008 is the highest in the U.S., as is the city's 64% drop in median home prices.

No. 2: Miami, Fla.
The sun and lack of a state income tax are the only things keeping Miami out of the top spot. Foreclosures hit one in 14 homes last year. Corruption is also off the charts, with 404 government officials convicted of crimes this decade in South Florida.

No. 1: Stockton, Calif.
Unemployment has averaged 14.3% the past three years, which is third worst in the country among the 200 largest metro areas. The housing market collapsed as well, with home prices down 58% over the same time. All the California cities on the list are struggling with the inherent problems the state is facing, including high sales and income taxes and service cuts to help close massive budget shortfalls.

America's Most Miserable Cities 2010

http://realestate.yahoo.com/promo/americas-most-miserable-cities-2010.html

America's Most Miserable Cities 2010
Kurt Badenhausen, Forbes.com
Feb 18th, 2010

Cleveland leads a slew of Midwestern towns on our annual list, but thanks to high taxes New York and Chicago make it too.

The city of Cleveland has had a colorful history. The Cuyahoga River, which runs through the city, famously caught fire in 1969 thanks to rampant pollution, and it wasn't the first time. In 1978 it became the first U.S. city to default on its debts since the Great Depression. Cleveland sports fans have had to endure more anguish than those in any other city. The city has been dubbed with a less than endearing nickname: the Mistake by the Lake.

This year Cleveland takes the top spot in our third annual ranking of America's Most Miserable Cities. Cleveland secured the position thanks to its high unemployment, high taxes, lousy weather, corruption by public officials and crummy sports teams (Cavaliers of the NBA excepted).

Misery was on the rise around the country last year. Sure the stock market was up big, but so were unemployment, foreclosures and bankruptcy filings. Meanwhile housing prices, the U.S. dollar and approval ratings for Congress continued their downward spiral.

The widely tracked Misery Index initiated by economist Arthur Okun, which combines unemployment and inflation rates started 2009 at 7.3 and rose to 12.7 by the end of the year thanks to soaring joblessness. That is the highest level since 1983.

Our Misery Measure takes into account unemployment, as well as eight other issues that cause people anguish. The metrics include taxes (both sales and income), commute times, violent crime and how its pro sports teams have fared over the past two years. We also factored in two indexes put together by Portland, Ore., researcher Bert Sperling that gauge weather and Superfund pollution sites. Lastly we considered corruption based on convictions of public officials in each area as tracked by the Public Integrity Section of the U.S. Department of Justice.

We expanded the list of cities under consideration this year to include the 200 largest metropolitan statistical areas (in years past we've examined 150), which led to a shuffling in the ranks. Any area with a population of more than 245,000 was eligible.

Cleveland nabbed the top spot as a result of poor ratings across the board. It was the only city that fell in the bottom half of the rankings in all nine categories. Many residents are heading for greener pastures. There has been a net migration out of the Cleveland metro area of 71,000 people over the past five years. Population for the city itself has been on a steady decline and is now less than half of it what it was 50 years ago.

Cleveland ranked near the bottom when looking at corruption. Northern Ohio has seen 309 public officials convicted of crimes over the past 10 years according to the Justice Department. A current FBI investigation of public officials in Cuyahoga County (where Cleveland is located) has ensnared more than two dozen government employees and businessmen on charges including bribery, fraud and tax evasion.

On the housing front Cleveland is dealing with thousands of abandoned homes. The city contributed to its foreclosure problem by providing down payments to many people that could not afford homes through the federally funded Afford-A-Home program. Cleveland led by Mayor Frank Jackson sued 21 large investment banks in 2008 who he felt were complicit in the subprime and foreclosure crisis that hit Cleveland hard. A federal judge dismissed the suit last year, but the city is appealing the ruling.

A 19% decline in foreclosures last year is possibly a glimmer of hope that the housing situation is starting to improve, although Cleveland still ranks in the top third of all metros for foreclosure rates according to RealtyTrac, an online marketer of foreclosed property. Cleveland and Cuyahoga County were awarded $41 million last month from the Department of Housing and Urban Development. This money will go towards demolition of homes, foreclosure prevention and the rehabilitation of homes.

There are certainly bright spots in Cleveland. Downtown has experienced a revival over the past 15 years helped in part by the construction of three new sports venues for the city's NFL, NBA and baseball teams. The Cleveland Clinic is one of the top medical centers in the U.S. and the largest employer in northeast Ohio.

Mayor Jackson's chief of staff Ken Silliman calls 2010 a very exciting year for Cleveland. He points to three projects in development for the city. The first is the Cleveland Medical Mart which is a convention center that targets the medical and health care industries. Next is a casino plan. In November Ohio voters approved casinos in four cities, and Cavaliers owner Dan Gilbert is leading a group that hopes to have a Cleveland casino up and running in three years. Lastly is the Flats East Bank project, which ran into funding issues during the financial crisis. The waterfront development will include an office tower, hotel and space for retail and dining.

"Clevelanders over the years have developed a tenacity to deal with these kinds of situations, and we are very aggressive in attempting to solve our problems rather than awaiting someone else's solutions," says Silliman.

Other cities on the list include Memphis, which came in third thanks to the second-worst rate of violent crime in the U.S. and an alarming rate of convicted public officials. Detroit, ravaged by the ailing auto industry was forth. Flint, Mich., was fifth. Also on the list? Chicago (No. 10) and New York City (No. 16). Torturous commute times and nosebleed-inducing taxes are the high prices locals pay for the cultural opportunities and corporate headquarters located there.

Our most miserable city last year, Stockton, Calif., nabbed the second spot on this year's list. Unemployment and crime continue to be major issues. Stockton ranked seventh worst in both of these areas. Stockton residents have average commutes that are among the highest in the country and, like all Californians, they suffer from onerous sales and income taxes.

Stockton Mayor Ann Johnston says the city is working to fix its problems. It has seen a reduction in crime in recent months as it targets troubled areas with an increased police presence. On the economic front, the city recently expanded the Port of Stockton, which it hopes will attract new companies. Stockton is an agricultural community, but the Mayor says the city is working to diversify its economic base and echoes Silliman's comments about Cleveland. "We're an All-American city," says Mayor Johnston. "And it's not because we sit on our hands and do nothing. It's because we recognize our problems and work to solve them."

America's Top 5 Most Miserable Cities

1. Cleveland, Ohio
2. Stockton, Calif.
3. Memphis, Tenn.
4. Detroit, Mich.
5. Flint, Mich.

California cities fill top 10 foreclosure list

http://money.cnn.com/2007/08/14/real_estate/California_cities_lead_foreclosure/index.htm

California cities fill top 10 foreclosure list
Stockton, Calif. records highest foreclosure rate among nation's metro areas according to a new survey.
By Les Christie, CNNMoney.com staff writer
August 14 2007

NEW YORK (CNNMoney.com) -- The binge that many housing markets went on in the early- to mid-2000s is over, and some of the hottest markets like California are now experiencing the worst hangovers.

But other areas, especially many that recorded slower home price growth earlier this decade, have seen little increase in foreclosure rates, according to the latest data released Tuesday from RealtyTrac, the online marketer of foreclosure properties.

"While foreclosure activity has skyrocketed over the past year in many cities, particularly in California, Ohio and the Northeast," James Saccaccio, RealtyTrac's chief executive, said in a statement, "foreclosure activity seems to be subsiding in parts of Texas, South Carolina and other states."

"Still," he said, "the overall trend is toward escalating foreclosure rates, with 82 of the top 100 metro areas reporting year-over-year increases in the number of homes affected by foreclosure."

Stockton, California now leads the nation in foreclosures. Of RealtyTrac's top 10 metro areas for foreclosures, four are in Central California.

Coastal California cities are doing relatively well, although foreclosures are up there too. San Francisco had one foreclosure for every 263 households, a fairly low rate, but up 83 percent from the first six months of 2006.

Stockton city drew thousands of home buyers to the Central Valley area from the prohibitively expensive Bay-area markets during the housing boom and saw home prices nearly double in the four years ended December 31, 2005, according to the Office of Federal Housing Enterprise Oversight.

Because of California's outsized home prices, option and hybrid adjustable-rate mortgages (ARMs) interest-only loans became widespread. They enabled home buyers to get into properties they could not otherwise afford.

But often these loans were time bombs; hybrid ARMs, for example, reset to much higher rates - and payments - after the first two or three years of low fixed rates.

Many buyers were also approved for expensive mortgages based on applications in which income or assets went unproven, the so-called no- or low-doc loans, AKA "liar loans."

Lenders underwrote mortgages for these borrowers based on their income or asset claims without proof and many times the claims were exaggerated. When hard times hit, these borrowers had fewer resources to fall back on than the lenders anticipated and foreclosures followed.

Mortgage meltdown contagion

Seven of the nation's top 10 metro areas are in the Sun Belt. Only three are in economically hard-hit areas, historically the kinds of places that once produced the highest rates of foreclosure filings.

Stockton recorded one foreclosure filing for every 27 households during the six months ended June 30, a 256 percent increase compared with the first six months of 2006.

Number two in the nation was Detroit, where job losses in the auto industry drove foreclosures higher. One of every 29 households recorded a foreclosure filing there, almost double the rate of a year ago. Las Vegas (one of 31, up 142 percent) was third.

The other California cities in the top 10 were Riverside/San Bernardino (one in 33, up 198 percent), Sacramento (one in 36, up 231 percent) and Bakersfield (one in 47, up 222 percent).

The lowest foreclosure rate recorded by RealtyTrac among the 100 metro areas surveyed was in Richmond, Virginia. It had just one for every 2,319 households, about the same as a year ago and a rate barely more than 1 percent of Stockton's.

Other low foreclosure metro areas included Greenville, South Carolina (one in 1,721, down 66 percent), McAllen, Texas (one in 1,494, down 35 percent) and Honolulu (one in 1,151, up 68 percent).