asu in the news 02-06-08 to - ASU News - Arizona State University

ASU in the News
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Source: Forbes.com
Title: Best Cities For Bargain House-Hunters
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Full Text: Property sharks looking to take advantage of local housing slumps are doing their best to
time the market, searching for the precise moment when prices bottom out before taking a bite.
They’d be smart to look for markets where job growth is strong, foreclosures are relatively low and
inventory is high. With these factors in place, buyers can still dictate terms of sale and negotiate
prices, but aren’t as exposed to the economic and lending risk problems that have sunk many
markets around the country.
Good places to look? Timing a market is tricky business, and prices alone may not be the best way
to determine a bargain opportunity.
What you need is a buyers’ market, where there is healthy job growth and more houses available
than people to buy them. This is not due to foreclosures and economic downturn, but to overbuilding
that should balance out in time. These markets ’are where you have high inventories but pliable
borrowers, with lenders willing to deal,’ says Anthony Sanders, a professor of finance at Arizona
State University.
This is what’s happening in Houston. Compared to housing prices in other cities, Houston real estate
has always been a bargain, which is part of why the population has expanded so much since 2000.
Jobs are being added to the books at the sixth fastest rate of cities measured, and while the city has
had more than a few foreclosures, especially in Harris County, it hasn’t taken a huge overall hit.
Based on inventory levels and construction projects in the works, buyers still have good standing to
negotiate price.
Behind The Numbers Our list includes 2006-2007 data on job growth, from the Bureau of Labor
statistics; foreclosure data from RealtyTrac, an online database of foreclosures gleaned from multiple
listing services, bank-owned properties, bankruptcy records, loan histories, tax liens and lender
information; and ZipRealty
In addition to Houston, and Raleigh, what we found were soft markets such as Orlando, Fla.
Who is to blame for the subprime crisis? Weigh in. Add your thoughts in the Reader Comments
section below.
Job growth matters, as it’s a sign that people are moving to a city and that they’re building the roots
and wealth to buy a home. On this measure, we used data from the Bureau of Labor Statistics from
2006 to 2007 to calculate which markets are adding people to payrolls. The timing of the data also
weeds out any places that saw their job growth explode in past years due heavily to housing or jobs
that are now gone, and we excluded any city losing jobs from our list. Excess housing inventory and
job loss don’t pair well.
But fast job growth coupled with a high foreclosure rate points to a more volatile market, one where
economic activity might be slowing, or where prices were untenable from the very beginning.
Kermit Baker, an economist at the Harvard University Joint Center for Housing Studies, says that the
equity problems that lead to foreclosures are more often than not ’the result of economic conditions in
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