Property Manager · Hayward, CA · Member since 2018 · 41 posts · 24 votes
I'm looking at the Case-Shiller Home Price Index and comparing cities. Generally the trend has been the same: a huge peak in 2007 followed by a crash, and a pretty steady rise since 2012. Phoenix, AZ is possibly the most extreme example, whereas NY, NY didn't drop as far from 2008-2012.
Why are cities such as Dallas, TX and Denver, CO. different?
What implications can this have for future market downturns? Is it likely that Dallas, TX is less resilient or more resilient?
Who knows....but a couple of ideas....one is that we did not have a huge runup in prices before the crash....more steady 2-3-4%/year, so people weren't buying $100,000 houses, but paying $200,000 for them like some other parts of the country. I think a lot of the homes built around that time period were fairly affordable vs wages. Seems like what I remember there were a lot of single story, very basic, 3bed/2bath/2car garage homes around $120,000. Probably the biggest issue we had was financing...lots of 100% and I even remember 105% financing and crazy schemes like that, so if two incomes split up or someone lost their job, or there was some issue to move, they were upside down and little consequence to just walk away (other than killing credit). The houses weren't built that well--cheap fixtures, cheap appliances, cheap flooring, etc so the houses were worn like an old car when the lenders got them back.
The other thing is that we have very diversified economy perhaps vs every other city in the country. We have oil and gas, banking, tech, telecoms, call centers, restaurants, two airlines, big airport, probably some ag, GM car plant, logistics, and probably a few other industries I don't know about.
This time around if we have a problem I think it will be in the 750,000-$1,000,000 or so price range. We are building a lot of those. I fear if there is a recession and middle-upper management gets wiped out as it has in the past, we will have a glut of those home with no one to rent or buy them.