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Old 12-29-2009, 01:16 PM
 
Location: Under Mount Doom
9,251 posts, read 6,130,391 times
Reputation: 4747

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Howdy All:

I did some digging around on City data and prepared a housing bubble index to seem which areas I am interested in are most likely to be overpriced. I am not interested in all these citys & towns, but added them for context.

The Bubble Index 9BI) is calculated as follows:

BI = (CD Median 2008 Home Price - CD 2000 Med. Home Price)/(CD 2000 Med. Home Price) times 100 divided by eight.

It results in an estimate of the annual rate of appreciation over the 2000-2008 period. Can you find Pittsburgh?

Actually, the most interesting thing to me was how high DC was and how low the Colorado cities were. I assumed all Californians wanted to move to Colorado, but apparently prices were fairly high there in 2000 and only modestly increased, at least compared to AZ, OR, and MT.

No, I was not drunk when I typed this in, but data does not paste into CD well, or I just don't know how to do it.

[SIZE=3]Location RE2000 RE2008 Bubble Index[/SIZE]
[SIZE=3]Washington,DC $153,500.00 $474,500.00 26.1[/SIZE]
[SIZE=3]Miami, FL $116,400.00 $313,300.00 21.1[/SIZE]
[SIZE=3]Bend, OR $138,100.00 $345,200.00 18.7[/SIZE]
[SIZE=3]Arcata, CA $133,500.00 $333,698.00 18.7[/SIZE]
[SIZE=3]New York, NY $221,200.00 $543,900.00 18.2[/SIZE]
[SIZE=3]Bozeman, MT $134,200.00 $313,740.00 16.7[/SIZE]
[SIZE=3]Flagstaff, AZ $149,000.00 $344,002.00 16.4[/SIZE]
[SIZE=3]Nevada City, CA $221,125.00 $500,125.00 15.8[/SIZE]
[SIZE=3]Bellingham, WA $148,900.00 $326,800.00 14.9[/SIZE]
[SIZE=3]Ashland,OR $185,000.00 $399,129.00 14.5[/SIZE]
[SIZE=3]Asheville, NC $105,200.00 $223,100.00 14.0[/SIZE]
[SIZE=3]Medford,OR $128,500.00 $265,000.00 13.3[/SIZE]
[SIZE=3]Reno, NV $147,900.00 $298,200.00 12.7[/SIZE]
[SIZE=3]Saint Louis, MO $63,500.00 $128,000.00 12.7[/SIZE]
[SIZE=3]Portland, OR $154,700.00 $310,900.00 12.6[/SIZE]
[SIZE=3]Seattle, WA $252,100.00 $491,600.00 11.9[/SIZE]
[SIZE=3]Missoula, MT $127,900.00 $247,800.00 11.7[/SIZE]
[SIZE=3]Boston, MA $210,100.00 $400,100.00 11.3[/SIZE]
[SIZE=3]Prineville, OR $86,100.00 $159,966.00 10.7[/SIZE]
[SIZE=3]La Grande, OR $88,400.00 $164,158.00 10.7[/SIZE]
[SIZE=3]Brookings, OR $142,900.00 $265,332.00 10.7[/SIZE]
[SIZE=3]Helena, MT $107,300.00 $198,378.00 10.6[/SIZE]
[SIZE=3]Boise, ID $118,100.00 $216,500.00 10.4[/SIZE]
[SIZE=3]Billings, MT $96,700.00 $175,300.00 10.2[/SIZE]
[SIZE=3]San Jose, CA $375,500.00 $663,100.00 9.6[/SIZE]
[SIZE=3]Salem, OR $126,300.00 $211,000.00 8.4[/SIZE]
[SIZE=3]Chapel Hill, NC $217,300.00 $356,878.00 8.0[/SIZE]
[SIZE=3]Denver, CO $160,100.00 $246,200.00 6.7[/SIZE]
[SIZE=3]Durango, CO $176,300.00 $258,204.00 5.8[/SIZE]
[SIZE=3]Dallas, TX $87,400.00 $126,900.00 5.6[/SIZE]
[SIZE=3]Pittsburgh, PA $60,700.00 $86,000.00 5.2[/SIZE]
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Old 12-29-2009, 02:25 PM
 
20,274 posts, read 18,911,542 times
Reputation: 2827
As an aside, I believe you could take the 2008/2000 ratio and then take the 8th root to get a more precise annual average appreciation rate. You can actually do that through Google.
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Old 12-29-2009, 03:02 PM
 
Location: Carnegie, PA
45 posts, read 98,037 times
Reputation: 34
The DC bubble is no surprise if you've lived there. I'm happy to be back in Pgh...where I can afford to be a first time home buyer
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Old 12-29-2009, 03:17 PM
 
Location: Under Mount Doom
9,251 posts, read 6,130,391 times
Reputation: 4747
Quote:
Originally Posted by BrianTH View Post
As an aside, I believe you could take the 2008/2000 ratio and then take the 8th root to get a more precise annual average appreciation rate. You can actually do that through Google.

Haha! Yes, I have heard you can enrich uranium through google too...! It's getting kind of scary. While they are avoiding "being evil" (or something like that) they are enabling the Lex Luthor's of the world...

Well, my Neanderthal method will have to work until I get down the google thing.

Wow! I will say, I amazed you have not seen a land rush from DC and NYC with those ratios.
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Old 12-29-2009, 03:46 PM
 
20,274 posts, read 18,911,542 times
Reputation: 2827
Quote:
Originally Posted by Fiddlehead View Post
Wow! I will say, I amazed you have not seen a land rush from DC and NYC with those ratios.
Until very recently, I would have conversations with my DC and NYC friends and acquaintances about these issues, and they would acknowledge the large and growing difference in affordability, but then would say something like, "But its Pittsburgh." I'm not entirely sure what that meant to them, but it wasn't something good.

Now recently I have been getting a little less of that, so maybe things are changing. But I do think that Pittsburgh's negative brand image has helped keep its low housing prices from triggering more of a migration from the East Coast.
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Old 12-29-2009, 04:41 PM
 
Location: Under Mount Doom
9,251 posts, read 6,130,391 times
Reputation: 4747
Here is a 3rd Quarter 2009 report on housing affordability,etc. Ok, maybe just SLIGHTLY more informative than the nonetheless patented, copyright protected, and don't plagiarize if you value your kneecaps "Fiddlehead Method"

Enjoy.

http://media.oregonlive.com/frontpor...9%20Report.pdf
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Old 12-29-2009, 10:08 PM
 
Location: Macao
13,028 posts, read 19,958,159 times
Reputation: 6600
Quote:
Originally Posted by Fiddlehead View Post
Howdy All:

I did some digging around on City data and prepared a housing bubble index to seem which areas I am interested in are most likely to be overpriced. I am not interested in all these citys & towns, but added them for context.

The Bubble Index 9BI) is calculated as follows:

BI = (CD Median 2008 Home Price - CD 2000 Med. Home Price)/(CD 2000 Med. Home Price) times 100 divided by eight.

It results in an estimate of the annual rate of appreciation over the 2000-2008 period. Can you find Pittsburgh?

Actually, the most interesting thing to me was how high DC was and how low the Colorado cities were. I assumed all Californians wanted to move to Colorado, but apparently prices were fairly high there in 2000 and only modestly increased, at least compared to AZ, OR, and MT.

No, I was not drunk when I typed this in, but data does not paste into CD well, or I just don't know how to do it.

[SIZE=3]Location RE2000 RE2008 Bubble Index[/SIZE]
[SIZE=3]Washington,DC $153,500.00 $474,500.00 26.1[/SIZE]
[SIZE=3]Miami, FL $116,400.00 $313,300.00 21.1[/SIZE]
[SIZE=3]Bend, OR $138,100.00 $345,200.00 18.7[/SIZE]
[SIZE=3]Arcata, CA $133,500.00 $333,698.00 18.7[/SIZE]
[SIZE=3]New York, NY $221,200.00 $543,900.00 18.2[/SIZE]
[SIZE=3]Bozeman, MT $134,200.00 $313,740.00 16.7[/SIZE]
[SIZE=3]Flagstaff, AZ $149,000.00 $344,002.00 16.4[/SIZE]
[SIZE=3]Nevada City, CA $221,125.00 $500,125.00 15.8[/SIZE]
[SIZE=3]Bellingham, WA $148,900.00 $326,800.00 14.9[/SIZE]
[SIZE=3]Ashland,OR $185,000.00 $399,129.00 14.5[/SIZE]
[SIZE=3]Asheville, NC $105,200.00 $223,100.00 14.0[/SIZE]
[SIZE=3]Medford,OR $128,500.00 $265,000.00 13.3[/SIZE]
[SIZE=3]Reno, NV $147,900.00 $298,200.00 12.7[/SIZE]
[SIZE=3]Saint Louis, MO $63,500.00 $128,000.00 12.7[/SIZE]
[SIZE=3]Portland, OR $154,700.00 $310,900.00 12.6[/SIZE]
[SIZE=3]Seattle, WA $252,100.00 $491,600.00 11.9[/SIZE]
[SIZE=3]Missoula, MT $127,900.00 $247,800.00 11.7[/SIZE]
[SIZE=3]Boston, MA $210,100.00 $400,100.00 11.3[/SIZE]
[SIZE=3]Prineville, OR $86,100.00 $159,966.00 10.7[/SIZE]
[SIZE=3]La Grande, OR $88,400.00 $164,158.00 10.7[/SIZE]
[SIZE=3]Brookings, OR $142,900.00 $265,332.00 10.7[/SIZE]
[SIZE=3]Helena, MT $107,300.00 $198,378.00 10.6[/SIZE]
[SIZE=3]Boise, ID $118,100.00 $216,500.00 10.4[/SIZE]
[SIZE=3]Billings, MT $96,700.00 $175,300.00 10.2[/SIZE]
[SIZE=3]San Jose, CA $375,500.00 $663,100.00 9.6[/SIZE]
[SIZE=3]Salem, OR $126,300.00 $211,000.00 8.4[/SIZE]
[SIZE=3]Chapel Hill, NC $217,300.00 $356,878.00 8.0[/SIZE]
[SIZE=3]Denver, CO $160,100.00 $246,200.00 6.7[/SIZE]
[SIZE=3]Durango, CO $176,300.00 $258,204.00 5.8[/SIZE]
[SIZE=3]Dallas, TX $87,400.00 $126,900.00 5.6[/SIZE]
[SIZE=3]Pittsburgh, PA $60,700.00 $86,000.00 5.2[/SIZE]
Very interesting. Most of these make perfect sense, but a few surprises.

Oregon is interesting...I do remember driving through there a few years back, and seeing all of these very modest homes for 1/3rd to 1/2 a million dollars! It was shocking...it's a pleasant state...but NOT that amazing!

---

The other conversation...NY/Pittsburgh. When I lived in NYC, I loved it...I felt like I had to go, as it seems like one of those cities that time goes by very quickly in, and suddenly you're 'way over the hill' without knowing what happened.

When living there...I always had this apprehension...this 'what if?'....what if I wanted to get married and have kids...what would I do? I couldn't live there anymore if that happened...I'd have to move to NJ or somewhere real ugly.

Anyways...NYC is great when you are young and single...or even old and single. Single because the apartments are so small!!...and you could never afford to raise a family AND live in a somewhat desireable place in the city, in my opinion.
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Old 12-29-2009, 11:12 PM
 
Location: Under Mount Doom
9,251 posts, read 6,130,391 times
Reputation: 4747
Quote:
Originally Posted by Tiger Beer View Post
Very interesting. Most of these make perfect sense, but a few surprises.

Oregon is interesting...I do remember driving through there a few years back, and seeing all of these very modest homes for 1/3rd to 1/2 a million dollars! It was shocking...it's a pleasant state...but NOT that amazing!

---

The other conversation...NY/Pittsburgh. When I lived in NYC, I loved it...I felt like I had to go, as it seems like one of those cities that time goes by very quickly in, and suddenly you're 'way over the hill' without knowing what happened.

When living there...I always had this apprehension...this 'what if?'....what if I wanted to get married and have kids...what would I do? I couldn't live there anymore if that happened...I'd have to move to NJ or somewhere real ugly.

Anyways...NYC is great when you are young and single...or even old and single. Single because the apartments are so small!!...and you could never afford to raise a family AND live in a somewhat desireable place in the city, in my opinion.
What is amazing to me about these numbers is how much more affordable uber expensive places (NYC, DC, Miami) were in 2000. Median prices in all were under $230k. Yet recently, a house in Bend, OR is now a "steal" at $250k. We are all like frogs in the boiling pot when it comes to these things. We don't realize how wacked out the whole system has been.
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Old 12-30-2009, 02:42 AM
 
Location: Martinsburg WV
131 posts, read 150,131 times
Reputation: 135
Quote:
Originally Posted by javajive711 View Post
The DC bubble is no surprise if you've lived there. I'm happy to be back in Pgh...where I can afford to be a first time home buyer

The DC bubble will surely be a shocker when it one pops in the not-to-distant future.

With almost no production and a shrinking tax base, its my firm belief that drastic depopulation of the federal workforce is on the horizon.

This is but another reason Pittsburgh is very attractive to me : The bubble factor is almost nonexistent.
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Old 12-30-2009, 08:11 AM
 
20,274 posts, read 18,911,542 times
Reputation: 2827
Quote:
Originally Posted by Fiddlehead View Post
What is amazing to me about these numbers is how much more affordable uber expensive places (NYC, DC, Miami) were in 2000.
Indeed, and as I have suggested here before, people in those cities who bought before the recent runup don't necessarily have a personal grasp on how unaffordable those cities have become (even people who just bought starter homes before the runup at least have the equity to move up--or they think they do). Meanwhile, young people just renting also haven't necessarily faced the full brunt of the price increases (they might be living in holes-in-the-wall or facing long commutes or so on, but young people will put up with that stuff). So right now it is just a relatively narrow group most impacted: people who didn't buy before the recent runup in prices but are just now getting to the stage of life where they are thinking about buying (or at least renting) a decent place.

Now unless relative prices come much farther down--and right now they appear to have stabilized, but that may or may not last--that group of affected people is just going to keep growing over time. But even as that group grows, for some time they will face the problem of their employers' decision-making being dominated by more senior people who bought before the runup, and haven't internalized the ramifications of the housing price situation.

So the pressure to start moving jobs to places where housing is more affordable will be growing, but it may be thwarted for some time. But at some point, again unless relative prices come much farther down, firms will start moving more and more jobs to more affordable places, because they will find that doing so will allow them to attract a higher-quality workforce at lower labor costs. And the more firms that blaze that path, the more potential employees will want to make that move, and the more firms that will follow suit, causing a feedback loop.

So in my mind, the relatively reasonable prices of the not-too-distant past are like a dam, and the growing group of people most affected by today's unaffordable housing are like the water starting to collect behind the dam. And right now the water level is still pretty low, but the water level is going to keep rising. And at some point the pressure will grow too large, and the dam will burst and some highly-talented people and desirable jobs will start flooding out of these hyperexpensive cities. And thanks to likely feedback loops it could quickly become a relatively rapid process, until the new demand in the target cities and the falling demand in the hyperexpensive cities causes prices to return to a sustainable equilibrium.

Again, though, all this is assuming prices in the hyperexpensive cities don't come down a lot more before then. So it is just one possible scenario, but I really think it is an inevitable scenario if prices don't come down a lot first.
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