Monday, June 22, 2009

Bubbletowns

I've looked at this topic before, but this post by Richard Florida has a nice map, made by Scott Pennington, that shows the unevenness of the housing bubble across the metropolitan areas of the US:

housing bubble map

The big cities of the East Coast, Florida, and the West in general had, to use a Greenspanism, the most "froth." But a number of regions were substantially spared from the housing bubble, especially places that most people don't want to live - the Rust Belt, smaller cities in the South, Texas... Actually, a lot of people want to live in Texas; it's one of the fastest growing states - a classic Sun Belt economy - so I'm not sure why it was one of the regions least affected by the housing bubble (with the moderate exception of Austin).

Note that this map uses housing price-to-wage ration, rather than the more common housing price-to-income ratio. Says Florida:
The housing price-to-wage ratio may provide a better gauge of housing bubbles. Income is a broad measure that includes wealth from stocks and bonds, interests, rents, and government transfers and other sources. Wages constitute a more appropriate gauge of a region's underlying productivity, accounting for remuneration for work actually performed.
Some of the results:
The housing-to-wage ratio also generates a number of surprises. Greater New York's ratio (9.4) was slightly higher than Las Vegas (9), and Greater DC..'s (8.7) slightly bested Miami (8.4). Boston (8.1) and Seattle (7.6) topped Phoenix (7.2). Chicago's (5.9) was higher than Tampa (5.6) or Myrtle Beach (5.5).

What regions seem to have avoided the bubble? The cream of the crop on the housing-to-wage ratio are Dallas (3.5), Houston (3.2), Pittsburgh (3), and Buffalo (2.8).
So yeah, if you wanted to avoid the worst of the housing bubble, you would have done well to locate in either the negative-growth Rust Belt, or the rapidly growing big cities of Texas. Color me mystified.

22 comments:

Andrew Byler said...

Texas has wide open land spaces and very little planning/zoning, which mostly serves to limit housing development and drive up prices of both vacant land and houses.

Chachy said...

But I don't see how that's different from Arizona, Colorado, Florida, Nevada, California, etc. And what you find in a lot of areas is that the housing bubble led to the building of a lot of housing developments for which there proved to be insufficient demand (thus bursting the bubble), so it doesn't seem like zoning and geographical limitations on growth caused the huge inflation of housing prices.

Richard said...

There's a lot of zoning/land restriction use in California & Portland, and in California, Florida, Boston, and NYC, the places where people want to live are constrained by geography ("South Florida" is essentially a narrow strip of land between the Atlantic and the Everglades). The Bay Area is surrounded by mountains & parks and has a big body of water smack dab in the middle, etc. Only LV and Arizona lack these characteristics. In those cases, real estate just became one big Ponzi scheme.

Chachy said...

Las Vegas and Arizona; California has some restrictions, but still has plenty of room for growth (some of the highest price/wage ratios were in places like Riverside, Oxnard, and Sacramento); Colorado - lots of space, few restrictions; ditto Salt Lake City; Florida has had all sorts of growth for decades, Everglades or no, and some of the bubbliest developments were vertical condo towers that never filled up, so it's not like geographical limitations were a big factor there - the housing stock found new and novel ways to get overbuilt anyway.

But I'll give you Portland (though it was actually one of the least bubbly cities on the West Coast, according to this map.

David Colborne said...

Actually, LV has a couple of constraints. First, it's surrounded by federally owned land (BLM), which, when it's sold to developers at all, is sold through a very small straw. Secondly, LV is rapidly running out of water, so getting water rights for development is becoming increasingly difficult and expensive.

Michael said...

This post at Rortybomb gives an EXCELLENT explanation of why Texas was spared the worst of the bubble:

http://rortybomb.wordpress.com/2009/04/21/ban-mortgage-prepayment-penalties-at-the-federal-level-1-texas/

In short - there are laws against prepayment penalties which eliminate the incentive for lenders to encourage borrowers to flip loans.

Chachy said...

Michael - very interesting article there. Who would've thought Texas would be uniquely well-regulated at anything?

Richard said...

BTW, Krugman (being the good economist that he is) also blames zoning restrictions for the bubble:
http://krugman.blogs.nytimes.com/2007/10/20/the-two-americas/.

The comments in the article Michael posted are really good as well; definitely a must read.

bruce said...

No surprise that Texas is very low.

The free-market works when you let it. The worst case scenarios are states like California where government intervention magnifies the worst aspects of the free market and tames the processes which would normally serve to dampen speculation. For example, artificially limiting supply through zoning, subsidizing the cost of living for people who would otherwise leave California and free up housing, increasing credit availability through bank regulation. In the end, effective regulation primarily works to counter-act the distortions which the first regulations introduced.

This is why we need to move towards greater government control, and less free market influence. Letting some free market influence makes it very hard for the government to keep control of things.

Anonymous said...

I don’t know If I said it already, but this so good stuff keep up the good work. I read a lot of blogs on a daily basis and for the most part miss925.com just wanted to make a quick comment to say I’m glad I found your blog. Thanks.

Best regards
Seo Motivation Ngobrol Seputar Bisnis Online

Anonymous said...

Kontes Seo Kerja keras adalah energi kita Pertamina

tn requin said...

sleeping bag
tablecloth
travel luggage
car gps
car parts
GPS navigation
portable GPS
lcd tv
flat tv
digital picture frames
unlocked cell phones
wedding dresses
wedding jewelry
chaussures mode
chaussures Femmes
women's shoes
round tablecloth
discount handbags
chaussures sport
chaussures pas cher
fashion bedding
id lanyard
lanyard
creative gadgets
gift ideas
kids wall stickers
wall stickers
bath curtains
kitchen faucet
bathroom faucet

dfadf said...

Microsoft Office
Office 2010
Microsoft Office 2010
Office 2010 key
Office 2010 download
Office 2010 Professional
Microsoft outlook
Outlook 2010
Windows 7
Microsoft outlook 2010

Permainan Online Memasak said...

I don't see how that's different from Arizona, Colorado, Florida, Nevada, California, etc Dating Tips . Fist Dating . First Dating Tips . Get Rid Of Hickey Tips . Rid of Blackheads Naturally

Cerita Seks said...

Nice information, cerita seks or you can go at cerita sex

USA Online Casinos said...

online gambling
online gambling
usa online casinos
online casino
best online casino
usa online casinos
usa online casinos
usa online casinos
us online casinos
online casinos for usa players
online casinos for usa players
online casinos for usa players
best online casinos for us players
us online casinos
usa online casinos

Anonymous said...

reverse cell phone lookup

reverse address lookup

cell phone directory

phone number search

free people search

criminal background check

reverse phone lookup

reverse phone lookup

www.muebles-en-lugo.com said...

It cannot really have success, I suppose so.

cheap ugg boots said...

Discount UGG Boots Auctioneers are introduced in the hands of a jade: "Yu Gong for this rhino horn shape, cut the rim around the mine lines, the body of the flow around the floating cloud, three embossed gold dragon, lively wine to climb along the Gong, the whole piece is very fine, color Wenrun Liang Lai. "

cheapest uggs ever Taiwan Green asked: "intend to do with their pen pal?" yt21fdg

ugg kenly black This time, Yin Bai has been used to living with the sisters, listening to this on the uniform was breathing fine under as a lullaby, before going to bed can also nonsense, even if the novel can be read magazines to exchange views.

uggs discount code Then small, I just feel afraid, may be vaguely aware of his father left the family.

www.uggsaustralia.me.uk Yinbai have to come forward, "me."

Anonymous proxy said...

Thank you for your information. I love to read it much. Best baby video monitor reviews here | Motorola video baby monitor Here | Summer Infant Video Baby Monitor here | Samsung Video Baby Monitor here | Free proxy server website | Colintan | buingocbinh | Jobs for 15 year olds Website | Jobs for 16 year olds Website

Anonymous proxy said...

I enjoy you because of every one of your effort on this site. My mum enjoys setting aside time for internet research and its easy to understand why. facebook development facebook developer | android application developer android developer | Youtube repeat youtube loop | Love quotation love quotes | Life quotation life quotes | Horoscope Horoscope

hadirlah.com said...

Thank you for your very nice article, do not forget to read my articles also kata kata bijak, kata kata cinta, kata kata romantis, kata kata motivasi and many other interesting articles on my blog that.