Housing Foreclosure Map
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James Joyner | Tuesday, March 3, 2009 |
A recent study seems to confirm a point that Dave Schuler has been making repeatedly for months: the housing bubble is a narrowly targeted geographic phenomenon:
Via Andrew Sullivan [Yes, him again. -ed.], who summarizes, “66 percent of potential housing value losses in 2008 and subsequent years may be in California, with another 21 percent in Florida, Nevada and Arizona, for a total of 87 percent of national declines.”
Now, to be clear, this doesn’t mean that housing prices aren’t a problem elsewhere. I live in Virginia, which is one of the states least impacted — indeed, in the DC suburbs of Northern Virginia, which are even better off — and houses here, including mine, have still had a significant correction in price over the past 18 months or so.
But this does seem to reinforce Dave’s point that a national solution to a regional problem could be counterproductive. As with Homeland Security, where states vie to distribute monies allocated to defend against terrorist attacks without much regard to the localized risk of actually being attacked by terrorists, we’re likely to see federal relief money poorly targeted.
About the Author: James Joyner is the publisher of Outside the Beltway and the managing editor of the Atlantic Council. He's a former Army officer, Desert Storm vet, and college professor with a PhD in political science from The University of Alabama. He lives just outside the Beltway in Alexandria, Virginia with his wife and infant daughter.
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I don't know whether you follow Calculated Risk, but the first graph on this page certainly backs that up.
http://www.calculatedriskblog.com/2009/02/house-prices-selected-cities.html
DS has always been correct on this point. But his distinction is even further amplified when one disaggregates the composition of the "housing crisis" by purchase motivation.
Let's consider "starter homes," vs "move up (second) homes," vs "vacation and retirement homes." The demographic and economic considerations for each of those class of homes, and their buyers, and their purchasing decision, is different.
One size does not fit all indeed. The markets in chaos are polluted with the latter class of homes/buyer. Peoria, IL on the other hand, with the first.
Compare the home price and foreclosure dynamics.
One size does not fit all indeed. The markets in chaos are polluted with the latter class of homes/buyer. Peoria, IL on the other hand, with the first.
Drew, this is one of the few times I agree with you... mind you, that still leaves me unemployed, but somebody has to take the hit here...
"Drew, this is one of the few times I agree with you..."
Well, this just shows you are trainable....nyuk, nyuk
Hope you are well. Here is some gratuitous and unsolicited advice. If you look at what type of construction will hold up best or rebound first, you need to think about the following sectors: Commercial: assisted living and health care facilities; college living space. Residential: apartments and starter homes.
Avoid hotel, office, McMansions strip malls.
Perhaps you knew all that.
The data in the link also appears to show a corrolation between foreclosures and a high ratio of home prices to median income, particularly where that ratio has increased substantially in the last seven years.
In other words, a significant part of "the problem" has been lack of affordable housing in certain parts of the country.
How do you come to that conclusion, PD?
Lack of affordable housing? (In the low income sense) I would come to almost the exact opposite conclusion: apparent discretionary income, available for pure speculation or for vacation / future retirement homes became the driver of values in exotic areas: Naples, FL (where I am) Scottsdale, AZ, Vegas, San Diego........
Speculative booms there are the root of the problem. Not "affordable housing" outside Detroit.
Is that what you meant?
I got it by comparing the ratio of median family income to median housing value for the states. Here are the ratios:
California:
4.0 (2000)
8.3 (2007)
Nevada:
2.8 (2000)
5.1 (2007)
Arizona
2.6 (2000)
4.2 (2007)
Florida
2.3 (2000)
4.2 (2007)
United States
2.4 (2000)
3.2 (2007)
Texas
1.8 (2000)
2.2 (2007)
That all suggests to me that a family with a median income was finding it much more difficult to buy a median house in four states.
Also, Drew, the study relies upon the Case-Shiller index, so it doesn't include condos or multi-unit dwellings that might serve as vacation or retirement homes. I've heard anecdotaly that these have been hit hard in Florida, so the problem might be worse.
Well, this just shows you are trainable....nyuk, nyuk
Drew, I knew you would get a nyuk or 2 out of that.
Hope you are well.
I am... I have a good woman standing beside me.
Here is some gratuitous and unsolicited advice.
It may be gratuitous and unsolicited, but that does not mean it is unwelcome.
If you look at what type of construction will hold up best or rebound first, you need to think about the following sectors: Commercial:
Commercial is what I have been working for years, but it sucks and is getting worse just now.
assisted living and health care facilities; college living space.
You are a smart guy Drew, you hit on 3 out of the 4 jobs I have worked on in the past 4 yrs... mind you:
Residential: apartments and starter homes.
are out these days... there is such a glut on the market (of foreclosed housing) that residential has pretty well shut down in this neck of the woods. (which has flooded the market with carpenters).
Really, I been thru hard times before, but I don't know if I am going to make it this time (as a "carpenter").
It's not merely that looking for a nationwide solution to a local problem is counterproductive, it's that while politically savvy, federalizing the problem makes it intractable. When you divide the amount of money that can be spent among fifty states rather than among five, it means you're willing to dilute the effectiveness of your plan in exchange for the feather of having a plan.
PD -
But does that lead to your conclusion? The median home price will be pulled up by speculative building and buying of homes independent of median income, yielding your statistic. If I and five of my closest friends trot on down to Naples and buy grossly overpriced $3MM homes in Port Royal I can jimmy the statistic, but does that mean there is not enough affordable housing?
