How many housing price cycles have you been through? Where I live (Southern California), your assumption is incredibly incorrect.
Central cities... central cities... central cities. That's been my mantra. Spot on, buddy! Unless there are successful edge cities with jobs to support the population, those places out in the middle of nowhere become the new lower class housing areas. But gas prices gotta STAY up without a viable alternative. Trends are hard to reverse particularly when they are 40-50years long (sprawl) despite hard facts to the contrary.
I've been through a few as well ... Condos ? Bubble, plain and simple. So. Ca. ? Not maintainable when few people can afford housing and thus companies wont locate workers in the area - same with northern california. The california economy will stagnate with companys not growing their california payrolls due to a lack of affordable housing.
that's the big factor I see reversing things. the trend has been, for companies to relocate work away form high cost areas. frankly, i would have expected more companies to move to midwest, or almost anywhere on the country's interior from the coasts where the costs are much lower, espeacially with the intnet enabling the move what's strange, is that it seems like for the most part, that compaies either stay put, or go straight to india but nonetheless, i think this boom really caps business growth in the high cost areas people who think corporate america is going to give raises to these areas are out of their goard
I lived in New Orleans for years, 1981 to 1986. I have taken more then a casual interest in the damage there because of this connection. I have been reviewing the sat photos of the flood damage and it appears to me that at least 25k dwelling units are going to have to be razed. In Nola, private companies don't write flood insurance. The federal government has a policy available but few people have it. Therefore the majority of homeowners who will have there houses bulldozed will not be able to collect from insurance because they will rightfully claim that this was due to a flood. I see no way out but foreclosure for these units that are going to be bulldozed. How is this going to affect the mortgage market?? John
Exactly how did you arrive at the number of 250,000 homes? At 3 people to house that is 750,000 people!!! What is population of all of NO? I would also guess that, from what I have seen on TV, most of those homes do not have mortgages. Most barely have a certificate of occupancy. Also, most are of modest cost so outlay should be minimal. The big decision is going to be whether to rebuild them or not. Most seem to be in areas very susceptible to floods so probably best not to rebuild there. There will be a huge argument of what to do with the people who did lose their homes. I would anticipate major restrictions on what and where one can build in these type of areas. Also, these restrictions are going to be felt around the US. Florida, So Calif etc. Any place that has exposure to natural damage. I think you might see a lot of coastal homes in Calif be bought by Feds and demolished. Florida real estate is going to take a huge "hit" over next few years also. Everybody is having fun till next hurricane and then we all scream for the "Government" to bail me out. Cry on TV with bozo Geraldo. The city of New Orleans, the Mayor and Governor had absolutely no plan for a hurricane. Utter stupidity. The Quarter, for the most part, did not sustain too much damage or high water. SteveD
SteveD Re:would also guess that, from what I have seen on TV, most of those homes do not have mortgages. Most barely have a certificate of occupancy. Also, most are of modest cost so outlay should be minimal. How did you come to this conclusion? There is some valuable real estate underwater right now. All you see are the poor on tv, but don't think that they are the only ones affected..... The people with money and nice homes left when they were told to evacuate.
New Orleans is a basically very poor city. Outside of the Quarter and some oil related business there has been no new companies coming in for decades. 67% of city is black, of which a third is in poverty. Very high murder rate, poor city services and no growth prospects. The valuable real estate had insurance. I don't see how an "outsider" is going to go into a city and make money on the real estate. Also, New Orleans is probably the most provincial city in America. That means they do not welcome "outsiders" at all. I read a statistic that something like 75% of population were natives. It is another world that only welcomes you if you are going to stay and party. No place to start a business, LOL. Good luck SteveD PS. I lived on Bourbon Street for a year and in the Garden District for a year. I know of what I speak.
I just heard on the news that they estimate that 1.5 million have been displaced due to the storm. Job lost will be the major factor in those areas not destroyed with flooding. I came up with 750k thinking half the people would have no choice but to walk away. Just say that it is only 125k foreclosures. Is that a big deal? I don't know. I guess I made the post because I was curious what others thought. John