Tuesday, September 16, 2008

Roll tide

Continuing on the story of unreal estate, the Los Angeles Times points out that this is not limited to the last couple of years.

Suburbs that arise on the far edges of the metropolis in a boom, more often than not, will recede in a bust. After the down times end, as they always seem to do, the bulldozers and house framers return. And the next cycle begins....

Since sprouting out of the desert lands beyond Riverside in the mid-1980s, [Moreno Valley] has lurched from outsized boom to neighborhood-gutting recession and back to boom, only to find itself battered yet again by the calamity known as the mortgage crisis.

When Peter H. King wrote those words, and the other words in his article, I began thinking about the ocean, and how the tides roll in, then roll out, then roll in, then roll out again. (Even King uses the words "sea change" to describe the phenomenon.)

However, in my view the parallel isn't quite so parallel. If the real estate market were like a tide, then Moreno Valley may fade away and the inland areas would remain. However, as I've noted, the devastation is occurring everywhere.

Joe Cortright disagrees:

“It’s like an ebbing of this suburban tide,” said Joe Cortright, an economist at the consulting group Impresa Inc. in Portland, Ore. “There’s going to be this kind of reversal of desirability. Typically, Americans have felt the periphery was most desirable, and now there’s going to be a reversion to the center.”

In a recent study, Mr. Cortright found that house prices in the urban centers of Chicago, Los Angeles, Pittsburgh, Portland and Tampa have fared significantly better than those in the suburbs. So-called exurbs — communities sprouting on the distant edges of metropolitan areas — have suffered worst of all, Mr. Cortright found.

Now I don't necessarily believe that Moreno Valley is an exurb - it may have been considered so in the mid 1980s, but today I believe that the designation more properly belongs to Hesperia, if not Adelanto - but it's obviously not a place to make a quick buck in the real estate market.

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