Creative Class

Dean Baker asks:

The median period of homeownership in the United States is only 7 years. This means that a high percentage of the people who bought a home in 2003 or 2004 will likely plan to move in the next two or three years. If these people are already underwater in their mortgage, with house prices falling at a 20 percent annual rate, it is extremely unlikely that they will be in their home long enough to accumulate any equity. If homeowners pay more every month than they would to rent a comparable unit and still accumulate no equity, possibly facing a short sale when they move (which has the same impact on credit ratings as a foreclosure), then it is not clear how much they are being helped under the plan.

A new University of Virgina study shows how very spiky it is:

Their analysis shows that most foreclosures have been concentrated in California, Florida, Nevada, Arizona and a modest number of metropolitan counties in other states. In fact, they claim that “66 percent of potential housing value losses in 2008 and subsequent years may be in California, with another 21 percent in Florida, Nevada and Arizona, for a total of 87 percent of national declines.” …

Although there are pockets of substantial declines, claims that overall housing values have tanked nationwide are exaggerated, they said. “In the Washington, D.C. metropolitan area, for example, prices have barely changed in the District of Columbia, Alexandria and Arlington County, and parts of Fairfax County in Virginia …

The number of foreclosures usually were lower in central cities than in some suburban counties, probably due to less demand in those suburbs…

Here are maps, tables for metro areas, and the full study.

From a report at KCET.org (via Calculated Risk):

For the past few years, the Inland Empire in Riverside County has been one of the fastest growing counties in the state – home to a major housing boom. But now the Inland Empire is pretty much the poster child for the foreclosure crisis. SoCal Connected tracked down some surreal sights associated with the crisis, including a guy who started a business turning abandoned, dead lawns green – with spray-paint.

Isn’t this the same place some economic development types were touting as a fundamental critique of the creativity thesis?