Richard Florida
by Richard Florida
Sat Nov 3rd 2007 at 1:11pm UTC

Bubblicious

Real_estate_bust

This graph by Justin Fox, Time magazine’s curious capitalist, charts 20 major U.S. metros on the S&P/Case-Shiller Home Price Index from January 2000 to May 2007.  The differences are staggering.  Generally speaking, metros that score highly on our creativity index continue to perform well. Seattle and Portland remain up as do Denver and Atlanta.  Boston and Minneapolis are down a but not too much. Places like Miami and Las Vegas are literally crashing and the outlook is bleak in Rustbelt centers like Detroit which never saw much appreciation to begin with. Before anyone says anything, LA does not score highly on the overall creativity index. Washington DC is really a tale of two housing markets: prices remain relatively stable in the city but are plummeting in the suburbs. San Francisco’s declines are modest.

North of the border where I live, real estate continues to go up and up. Check out this story on serving up Toronto to the “super-rich” in today’s Globe T.O. section.

7 Responses to “Bubblicious”

  1. Michael Wells Says:

    Looking at this is like the stock market “crash” of 2002. One year trends were diving, but compared to 5 or 10 years earlier they were still flying. The chart shows that LA is at only 260% of its value seven years earlier, down from 270%. Not exactly a disaster unless you bought high and are trying to sell or refinance.

    But I also want to comment on Portland, which I know better. Certainly a big part of the continuing growth is that people keep moving here and needing somewhere to live. But another factor is who bought. Portland didn’t have the mass of speculators, most people bought homes to live in for a while — so if they don’t have subprime, variable loans (and most don’t) the market fluctuations don’t matter to them. This is a big contrast to Vegas and Florida, where investors wanted to “flip” houses for quick gain and got stuck.

  2. Wendy Says:

    Michael makes a good point about the lack of speculation in certain markets. Also, what this graph doesn’t show — if I’m reading it correctly — is how high the base 100 price was in certain cities and its impact. Portland and Seattle were not that cheap to start with compared to places like Las Vegas, making them less tempting for speculators — or cutting a lot of potential speculators out of the market because of the high prices. The price increases seen there are therefore more reflective of the actual supply of and demand for housing than they were in other cities where speculators created artificial demand.

  3. Unbubble Says:

    I think your facts are way off base for Las Vegas. If Vegas is crashing then why are land prices along the Las Vegas Strip still soaring? Why has Strip land just in 3 years gone from $4 million an acre to $34 million? Why have luxury condos on the Strip gone from $500 a sq ft to the current range of $1600 to $3000 a sq ft? Oh and did I mention that there are only 3, that’s right, 3 foreclosures now in luxury condos along the Strip or near it? Don’t mix single family home headaches with the internationally driven luxury condo real estate in Las Vegas. If you are going to report on Vegas, do it accurately or not at all.

  4. RF Says:

    UB – I think the graph says everything that needs to be said about Vegas. if you have an issue with that you might want to take it up with Case and Shiller and S&P. But their facts look pretty good to me.

  5. Grace Says:

    “LA does not score highly on the overall creativity index”?

    ‘Splain for me. Why does LA not score highly? I looked over your website and found lots of pretty maps but really no explanation on why LA is not scoring highly on the “overall creativity” index. Could it be because we are not religious enough? Because our houses are too expensive and too small to hold creative brains? Because too many Angelinos are uni-lingual in something other than English? Because we had Goth, oh, like 10 years ago?

    I no get, so ’splain for me please. ;-)

  6. Gary Dare Says:

    In the case of the Pacific Northwest, property values are driven by the region being a prime destination for relocation. Oregon is the number 1 destination of those leaving California, for example.

  7. prefab homes Says:

    You completely misinterpreted what I was saying. I’ m not suggesting that property taxes should be used to“ keep out the riff- raff”. I’ m just pointing out that owning a home has a periodic upkeep cost EVEN IF PROPERTY TAXES DON’ T EXIST! You still have to mow the lawn, paint the fence, fix the roof, etc. If you don’ t pay those periodic costs, your house becomes unliveable, and eventually drives down the values of the properties around it. Because of building and safety codes, someone who worked their…