Real Estate Markets Are No Longer Local.
Real estate is fundamentally a very local market. That's why the boom in CA is not even felt in neighboring Oregon.
I don't think that statement is true for the current RE cycle. On the contrary, we have seen a global convergence of RE markets as liquidity in the form of cheap money has flooded the globe. The Auckland RE market and the Sydney RE markets are driven in part by the London RE market as labor, which has the right to live and work in all 3 cities, has migrated with savings in tow--thus discovering and eventually erasing relative values.
Even in the last RE cycle of the late 1980's there was ample evidence that Oregon and WA state markets were being driven by the CA market. That's even more true in this cycle.
I'm not sure how iron-clad you mean your statement to be. It sounds like Law. And I don't see that any such law exisits any longer.
At 15% affordability, San Diego for example is no longer a "fundamentally local market." In fact, SD is thriving as a destination globally for the mega-wealthy to retire, and/or obtain a preferred lifestyle and climate.
15% Affordability!
What's happened globally is that there is highly liquid arbitrage that is driving numerous cities to a new classification as global-destinations for nomadic and portable capital, and labor. I live in Western Massachusetts and our market is absolutely, 100% being driven by the national RE market in the US as workers sell short their current RE market in the major cities and relocate here. My survey of the people who have moved here from NYC, SF, London, Boston, DC, etc and my surveys of the RE brokers and press coverage confirms this.
Final thought: practically every conversation I have now with people about RE indicates the new, national arbitrage model which has destroyed the now antiquated idea that RE is "local." Everyone is now open to move to anyplace that will offer the best mix of prices to wages--with the desireables thrown in.
The NYT piece on Las Vegas this Sunday was yet another great example of the new, national fluidity. |
