Tuesday, April 28, 2009

Leaving expensive areas

I ran into another reason for home prices to keep dropping; Although even I am starting to expect bottom to be hit within a year or so as the rate of fall has been quite impressive.

This article pointed out that people have been migrating from expensive areas to cheaper areas for quite some time now. So parts of the country that can freely put up new homes are sucking the population out of areas like San Francisco that have trouble finding room for more homes.

Studies on economic expansion by the Dukakis Center have demonstrated that there is a powerful correlation between extremely high housing costs and slow economic growth. Since 2000, those areas with the very highest housing costs - such as Greater Boston, San Francisco, Honolulu, and the New York metro area - have experienced net domestic outmigration and slower employment growth than regions with more modest housing costs. Indeed, the 10 most expensive metropolitan areas in the country all experienced net out-migration and slower employment growth than average while those areas with somewhat more modest home prices enjoyed the fastest growth in new jobs.

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