On September 12, the New York Times published an interactive feature titled “The Epicenter of the Housing Bust is Booming Again. (That’s a warning sign.)”
Matthew Goldstein is a business reporter for the Times, and one of the four contributors to the piece. He told State of Nevada that his team looked at North Las Vegas as exemplary of the recession, recovery, and current boom, delving into individual stories of hardship to show how they illustrate larger national trends.
They looked at the zip codes with the highest number of foreclosures during the recession, and 89031 in North Las Vegas was second on the list.
Since the bottom of the housing crisis, home prices in that zip code have jumped 135 percent, Goldstein said.
“If you go nationally, a lot of prices have recovered not necessarily back to where they were in 2006, which was the peak before the crisis began.” he said.
In the Las Vegas valley, the price change may be so extreme because home prices had such a long way to go from the very rock bottom of the market to where they are now.
“You will see a lot of prices have come back, which is a good thing but it is also a negative thing because there hasn’t been enough home construction particularly at the low end to meet the needs of a family starting out who wants to have a more moderately priced home," he said.
Goldstein said there are a lot of reasons why there are so few affordable homes, including the transfer of wealth. People had to give up being homeowners and are now renting, which means the wealth they had in their homes has shifted to rental property owners.
In addition, many developers went under and those that survived don't want to build smaller less expensive homes. Plus, lenders don't want to give out smaller loans, after being penalized for the subprime loans they were giving out before the recession.
Another factor is that wages are still stagnant. While the country is near full employment, wages have barely budged. Goldstein said it can take a long time for someone making $40,000 or $50,000 to put away the money for a downpayment on a house.
As far as a solution to affordable housing goes, Goldstein says that, because there are so many factors feeding the problem, it will take a varied solution.
“It’s sort of concerted effort, sort of working together with lenders, builders and probably the government getting involved to make more creative solutions,” he said.
Goldstein said it would be wrong for people to assume that because housing prices are back that the housing market is fixed. It is not.
However, he is not seeing some of the reckless behavior that led to the Great Recession. There aren't as many subprime or predatory loans being handed out.
And as of yet, a large number of homeowners are not refinancing their homes or taking out home equity loans to pay for their lifestyles and compensate for a lack of wages.
“You need to be conscious of the fact that housing prices do not necessarily go up on a straight line forever,” he said.
That is a lesson thousands of people in Las Vegas learned the very hard way 10 years ago.
From KNPR's State of Nevada: Las Vegans Recall Fear, Uncertainty When Economy Crashed In 2008
Matthew Goldstein, business reporter, New York Times
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