I wrote an article for the current issue of BusinessWeek called Boom! Bust! Boom? Here’s a link. My main finding is that around 40% of the major markets where there were housing busts eventually came back stronger than ever in terms of inflation-adjusted house prices.
Now I have a question for all you opinionated blog commenters. Which market will come back faster—Phoenix or San Francisco?
You could broaden that question a bit. Which will come back faster, markets like Phoenix and Las Vegas that are still relatively cheap, or markets like San Francisco and Boston that have always been expensive?
Yet another way you could ask the question: Which will come back faster, a city like Phoenix where there’s still lots of open land in the metro area, keeping a lid on land costs? Or one like San Francisco, which sits on a peninsula with very little open land and has strict zoning? Some people argue that prices in Phoenix got way ahead of fundamentals in the past few years because they jumped in spite of abundant land. By this theory, the boom in Phoenix was speculation, and what speculators giveth, speculators taketh away.
Your thoughts welcomed….
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.