All Real Estate is Local

So where is the sub-prime crisis, anyways?

Whenever I pick up the paper I read stories about people turning in the keys because they couldn’t pay the bank. But I don’t see a bunch of vacant homes when I look around.

I know that you can’t judge an economy anecdotally, but it seems like the national residential vacancy rate of 10% is a little overstated. Probably if I worked in Nevada or Phoenix it would be different, but horror stories of suburban blight and 1 in 4 homes empty seem more like scary tales we tell around the campfire than clear-headed assessments of the real estate market.

The latest Case-Schiller data show that prices rose the last couple months in 8 of the 20 major cities that the index follows. The basket cases—Southern California, Nevada, Arizona, Florida, and Detroit–are still falling, but their pace of decline has slowed. In places like Portland, Denver, Atlanta, and Boston, prices are rising.

I know the pundits say that there’s a tsunami of foreclosed properties just waiting to hit the market. But when I look at the local numbers, the horizon looks clear.


Douglas R. Tengdin, CFA
Chief Investment Officer
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