Real Estate | Geographical Perspectives

Three Ideas that Might Help Resolve the Housing Crisis

Dear President Obama (and Governor Romney),

I know that you would like to be re-elected (elected) this year and you’ve probably been thinking about how you might improve the economy over the course of the next 8 months to better your chances (or what you would propose to do to stimulate the economy once in office). One of the biggest problems your administration (the country) has faced is how to resolve the housing crisis. Well, today is your lucky day because I have 3 suggestions that, in my estimation, would improve the housing situation in the US and provide you with talking points that will appeal to fiscally conservative independent voters around the country.

Here are my 3 ideas:

Banks are Destroying America’s Neighborhoods

I read an excellent piece this morning in the New York Times written by Greg Smith about why he was leaving Goldman Sachs. In short, he says it’s become too sleazy as short-term profit motives are now trumping all other considerations.

In the past 2.5 years I’ve been investing in real estate in my home town Pueblo, Colorado. What I’ve found is that large banks are dragging out the foreclosure process so that homes are left vacant for 18 months or more. This is bad for everyone.

It’s bad for the banks because while the homes sit vacant they deteriorate and lose value.
It’s bad for the neighborhood because it drives down prices and vacant homes invite criminal activity.
It’s bad for local government because the value decline results in lower revenue while additional criminal activity requires higher expenditures.
It’s bad for investors and prospective buyers because they have to spend more money on repairs.
It’s bad for renters because the reduced housing inventory decreases supply and drives up rental costs.

Map of Housing Price Index Change Illustrates Four Clusters of Misery

A couple days ago I posted a list of metropolitan areas and their associated 5-year change in housing prices. I find it interesting to see the data at a more granular level because when you aggregate by state a lot of information gets hidden away.

Today I made a map of the same data. I used a new web-based mapping program that TerraSeer is developing called MarketSeer. More on that coming soon. The mapping program is in beta so some options (colors, etc) are limited but here’s a map displaying Housing Price Index changes over 5 years. The darkest green circles have the largest declines in home prices and the light colored circles have had either modest declines or increases in housing prices. The circles are sized by population.

Housing Price Index changes by MSA

I get a little annoyed when I see articles ranking which states have the worst foreclosure problem or the biggest drop in housing prices over time. Why would anyone want to look at this at the state level? Maybe state governors and political talking heads? Not really my kind of audience. The economic drivers that determine the health of a housing market are far more localized and don’t really care about state boundaries. I think you have to at least look at metropolitan areas to learn something about housing prices.

For example, let’s look at Illinois.

Top 25 Sunniest US Cities Ranked by Housing Cost

I recently put together a way to calculate the price of a day of annual sunshine. I thought some people might be interested in finding just the sunniest places in America ranked by the cost of owning a home in those locations. Abilene is #1 and Texas dominates with 5 of the top 7 locations. California also has 5 cities in the top 25 but most of them are near the bottom due to high housing costs. Cities in Arizona (4), Colorado (3), Nevada (2), Florida (2), Louisiana (1), Oklahoma (1), New Mexico (1), and Hawaii (1) complete the list.

Here are the Top 25. Or, check out this map.

The Price of a Sunny Day: Top 5 Bargain Cities for Sunshine

I recently learned that my hometown, Pueblo, Colorado, receives more sunshine than San Diego, California. I was really surprised and began to wonder who pays the most and who pays the least for sunshine in America? So I decided to take a look and see what I could find out.

This simple analysis assumes that all you care about is getting the most sunshine at the lowest price of housing (owning rather than renting) in the US. According to my calculations, the best deal can be found in Abilene, Texas at $252.45 per day of annual sunshine and the worst deal would be San Francisco, California at $2,720.22 per day.

You can find the whole list at the bottom of this post or click here to see a map. Here are the top 5 for each of the four census regions in the US:

Why Relocate to Pueblo Colorado

[After you read this you can check out my Pueblo 5-year Report Card]

I’m one of the growing numbers of fortunate people who are able to work from a home office and can live just about anywhere in the US. My only key work requirements are a good phone line, a solid internet connection and a major airport within driving distance (well, a quiet room and a pot of coffee are pretty important as well). After a lot of data gathering, analysis and pro-con list making, my wife and I have chosen to relocate from Ann Arbor, Michigan to Pueblo, Colorado. Our decision was biased by a variety of factors but I’ve been singing Pueblo’s praises for a few years now as a great place to invest in real estate and I’ve decided that living in the community is a way to put my money where my mouth is. Now that we’ve committed to the move, it seems to be a good time to make a written case for Pueblo. So, here goes.