Unlike OTHER markets, Pittsburgh housing market is S-T-A-B-L-E !!!! (Philadelphia, Reading: crimes, felony)
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By the way, not to belabor the point, but another side effect of the interventions in the housing markets is that they may have reduced labor mobility a bit. Historically, in recessions people will quickly move from higher unemployment areas to lower unemployment areas (for obvious reasons). We've seen some of that in this recession, but not nearly as much as in most prior recessions, and a leading possible explanation is that a lot of people are stuck in mortgages they can't easily get out of. The interventions in the housing market may have prevented an even worse economic catastrophe, but they may also have slowed down the process of people getting out of those situations.
Assuming that is all true and that over the next few months (or years) more people do start working out of those situations, you could continue to see a steady stream of foreclosure- and short-sales in the former bubble markets combined with a steady stream of increased out-migration. The predictable result would again be a prolonged period of depressed prices for housing in those markets.
Just an idle point, but historically when real estate markets go through a really dramatic boom and bust, after hitting a nominal price bottom they then tend to stay fairly flat for a long period (where "flat" can mean further declines in real terms, as prices stay flat nominally but inflation erodes value, and "long" can mean many years). That is basically because during the boom you will likely have seen speculative overbuilding, and you won't see significant appreciation again until all that overbuilt stock is absorbed by new demand. And new demand may not be showing up particularly fast in places where the local economy has been shocked by a dramatic real estate boom and bust cycle.
Accordingly, even if you think a nominal bottom has in fact been reached in the former bubble markets (and that may or may not be true--the federal government has been intervening in various ways to keep housing prices from crashing too fast, and there may be more price readjustments to come as that support tapers off), it is quite unlikely you would need to be in any particular rush to buy into those markets.
The bold is what happened in Pittsburgh after the steel industry crash. Pittsburgh's market has essentially been in "recovery" for a number of years, not that it ever was a "bubble" market. It has its own unique situation.
The bold is what happened in Pittsburgh after the steel industry crash.
Yep. The cause in that case was not speculative overbuilding but rather an unexpected crash in demand. Nonetheless, the effect ends up being the same: an oversupply which leads to stagnant prices for a long period.
Incidentally, yet another version of this happened in Texas. In the 1980s, Texas had a real estate boom and bust (related to the oil boom and bust, some financial shenanigans, and so forth). Again, the result was a long period of relatively stagnant prices, and today it remains the case that the Texas cities are among the few large cities with housing prices comparable to Pittsburgh's.
On the plus side, that also helps explain how Texas managed to dodge the housing bubble, for multiple reasons (in addition to low prices and little demand for speculative building, Texas also had relatively strict mortgage lending laws, likely in part because of their recent experience with a real estate boom and bust).
Yep. The cause in that case was not speculative overbuilding but rather an unexpected crash in demand. Nonetheless, the effect ends up being the same: an oversupply which leads to stagnant prices for a long period.
Incidentally, yet another version of this happened in Texas. In the 1980s, Texas had a real estate boom and bust (related to the oil boom and bust, some financial shenanigans, and so forth). Again, the result was a long period of relatively stagnant prices, and today it remains the case that the Texas cities are among the few large cities with housing prices comparable to Pittsburgh's.
On the plus side, that also helps explain how Texas managed to dodge the housing bubble, for multiple reasons (in addition to low prices and little demand for speculative building, Texas also had relatively strict mortgage lending laws, likely in part because of their recent experience with a real estate boom and bust).
My recollection is that Texas had a huge oil boom in the 1980s, when Reagan ruled and every Texan thought they would be a millionaire (ok. exaggerating for effect, but bear with me). S. Coloradoans (Durango and environs), gazing up from their meager gruel of poverty and scenery, hated them with a passion, because they were always rolling into town and snatching up properties. I would guess there was a building spree in Texas at that time. I am assuming after that bubble burst, things just never reignited, at least on the housing front. So, would support the general model, it supported.
My recollection is that Texas had a huge oil boom in the 1980s, when Reagan ruled and every Texan thought they would be a millionaire (ok. exaggerating for effect, but bear with me). S. Coloradoans (Durango and environs), gazing up from their meager gruel of poverty and scenery, hated them with a passion, because they were always rolling into town and snatching up properties. I would guess there was a building spree in Texas at that time. I am assuming after that bubble burst, things just never reignited, at least on the housing front. So, would support the general model, it supported.
the oil bust began around 82 I believe so the timeline with Reagan doesn't fit. you can look at an oil price chart and see when the bust started. It wasn't just arecession in Houston, it was a Depression. that said, Texas cities are some of the few that have been adding jobs AND people and still remain good values. Lots of people hate Texas but I wouldn't underestimate them.
I have a nephew who basically lost his shirt on a house in Houston in the early 80s. He lost his job, and he couldn't sell the house for as much as it cost. He was very young and had virtually no equity in it, because "you couldn't go worng buying", blah, blah.
Wow, all this stuff from Texas sounds vaguely familiar, especially the advice to Katiana's nephew...I think I heard that around 2002 here...
I don't underestimate the Lone Star State, nor did I share the disdain for Texans of the Durangoans (at that time). However, I would prefer if they keep their politicians in the state, thank you. My mental list starts with Tom Delay and goes downhill....
Wow, all this stuff from Texas sounds vaguely familiar, especially the advice to Katiana's nephew...I think I heard that around 2002 here...
I don't underestimate the Lone Star State, nor did I share the disdain for Texans of the Durangoans (at that time). However, I would prefer if they keep their politicians in the state, thank you. My mental list starts with Tom Delay and goes downhill....
didn't houston just elect an openly gay female mayor? Texas is a big state. didn't PA have a legislator that wanted to stop evolution from being taught in schools recently? anyway, back to the Pittsburgh market and OTHERS, I do think places like Phoenix, while attractive in many respects, benefitted from unsustainable job growth related to the housing bubble...in other words, a huge industry of moving people TO phoenix. that said, some of the reasons places like Texas and Phoenix attract people isn't just sun, but a good place to run businesses (and therefore hire employees) and is something ALL of Pennsylvania could learn from. We have a Metcalfe from Butler County trying to "crack down on illegals because there aren't enough jobs" but it's all political BS. where is he trying to lower PA's 9.99% corp income tax rate (highest in the nation)? where is he trying to tackle PA's notorious bureaucracy? In other words, he'd rather pass an inflammatory bill banning new residents than make it easier for us to make a living. and that's to say nothing of the assbackwards wiune and spirits system here.
Last edited by pman; 05-06-2010 at 07:22 AM..
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