Professor Mark J. Perry's Blog for Economics and Finance
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Nevada is just getting creamed by foreclosures as well.Easy to build out from city centers in desert country, so supply surges in response to demand. You get no inflation, and now you get deflation. That is the USA story--with open borders, goods, services, labor and capital flow in when there is demand. You get growth but little inflation. The Fed can crank the presses up for years. Bernanke should put the lever on "maximum" and take a long nap.
That's exactly backwards. Nevada got creamed because they can't build out. Most of Nevada is government owned. Las Vegas, home to 80% of Nevada's population, is completely ringed by government land and it is impossible to build out. Vegas literally has nowhere to expand. The result is no different than anti-growth "smart growth" laws: extreme volatility in prices.
Thanks for posting this article.For those interested there are three foreclosure blogs that may interest you. Swarm the Banks has links to the most current foreclosure articles from several dozen blogs. UNfair FORECLOSURES chronicles the types of unfair foreclosures going on in the United States.Parallel Foreclosure chronicles the outrageous mistreatment of american homeowners who simply wanted the opportunity to apply for HAMP without being pre-penalized.
"Easy to build out from city centers in desert country, so supply surges in response to demand. You get no inflation, and now you get deflation. "Huh, no inflation?? I lived in Phoenix during the bubble years. Towards the end, the median home price went up 43% in one year in Maricopa county. In the long run, everything reverts to the mean. And here we are.
An interview with Robert Schiller: House Prices Could Fall For Years
The page “Foreclosures by State” from MyCashFlowNotes.com summarizes the effects of home foreclosures in two U.S. states with high foreclosure rates: Arizona and Nevada. The author notes that Arizona’s economy was highly based on home sales and construction. Despite the end of the recession, the page notes that Arizona still boasts a 9.7% unemployment rate. Nevada has more foreclosures than any other state, according to the page. Not to mention, the author claims that Nevada also has the highest unemployment rate of any state in the nation – a 14.4% unemployment rate.Randian--Nevada has more foreclosures than any other state. How could they not be building a lot homes (during the boom?). Also, why has not the famously low Nevada income tax helped the state unemployment rate? Worst in the nation? Is it because Nevada is trying to become successful on low taxes and gaming, and that formula does not work? Mexico has low taxes and gaming.
How could they not be building a lot homesThat's not what I said. I said they can't build out. Land shortages cause acute spikes in land prices during times of high demand. That's why prices went up so much in Las Vegas. Land shortages do the opposite when demand slacks: prices suffer acute downward motion. You see the same in California and Florida, both states with strict statewide "smart growth" rules.
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Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.
Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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