By Daniel Kindya December 9 2010 Urban Economics Introduction In mid 2000s housing prices had hit alltime high Subprimemortgage rates and increased demand for housing led to housing boom ID: 279614
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Slide1
How Durham Fared in the recent housing crisis and the road to recovery.
By Daniel Kindya
December 9, 2010
Urban EconomicsSlide2
Introduction
In mid 2000’s, housing prices had hit all-time high.
Subprime-mortgage rates and increased demand for housing led to housing boom.
Many new homeowners were unable to pay mortgages. Caused foreclosures.Hardest hit areas include California, Arizona, New England.How did Durham fare?
Photo Courtesy of epa.gov/kidshometour/tour.htmSlide3
Annual new privately-owned Residential Building permits
A measurement of growthSlide4
Durham Building Permits
Year
Permits
Avg Cost
1996
997
111,800
1997
1274
123,50019981519120,50019991554148,10020001283152,60020011633156,30020021590159,70020031834163,50020041937164,10020052176165,80020062002176,40020071574182,60020081082187,2002009739189,100
Expansion then decline.Reasons and ForeclosuresPrice trendNew home value increasing, old home value decreasingFirst time homeowners more affectedWealthier Durhamites less affected
Data Courtesy of city-data.com and US Census BureauSlide5
For comparison: Kent County, Delaware Building Permits
Year
Permits
1996
622
1997
629
1998
676
19997202000854200195820021,44720031,77620042,04220051,97020061,50120071,33220088282009732Why Kent County? A typical US county hit a typical amount by housing crisis. Similar trends in beginning.Larger spike than Durham (2000-2004: Durham 151%, Kent 239%)Similar bust to Durham (2004-2009: Durham 38.2%, Kent 35.8%) Data Courtesy of US Census BureauSlide6
For comparison: Maricopa County (Tempe, Arizona) Building Permits
Year
Permits
1996
29,387
1997
31,728
1998
35,149
199936,347200033,158200134,669200236,312200341,388200448,228200543,397200628,702200721,09420089,99220096,b451Tempe, Arizona was one of hardest hit areas during housing bust.Similar trends in beginning.Smaller percentage spike than Durham (2000-2004: Durham 151%, Tempe 145%)Much larger bust than Durham (2004-2009: Durham 38.2%, Tempe 13.4%)Data Courtesy of Us Census BureauSlide7
Housing Units vs. Population
A measurement of availabilitySlide8
Housing Units
Year
~Housing Units
1970
33,000
1975
36,000
1980
39,000
198548,000199058,000199570,000200080,000200595,000Trend of increasing.Large increases starting in late 80s until today due to growth of fringe Durham and decline in central city Durham.Data Courtesy of city-data.comSlide9
Population
Year
~Population
1970
95,000
1975
100,000
1980
105,000
1985120,0001990140,0001995160,0002000190,0002005205,000Trend of growth.Starts increasing more in mid 80s due to improvements in Durham and continues today.Data Courtesy of city-data.comPhoto Courtesy of pulse.pospsmart,dkSlide10
Ratio
Year
People / Housing Unit
1970
2.88
1975
2.78
1980
2.69
19852.5019902.4119952.2920002.3820052.16High ratio in 70s and 80s due to overcrowded central Durham neighborhoods.Outer Durham growth in 90s reduced ratio.Ratio grows a bit in 2000, finding equilibrium.Housing boom in 2005 causes largest 5 year decrease in ratio.2010 numbers unavailable, but due to foreclosures overwhelmingly likely a higher ratio. Slide11
Home Loans Given by Durham Banks
A measurement of demandSlide12
Loans vs. Population Trends
Year
Loans
%
Change in PopulationLoans
/ Change in Population
2000
2,123
2.28%
931.120012,2852.39%956.120022,1342.11%1011.420032,6931.15%2341.720043,0471.60%1904.420053,8811.85%2097.820064,0382.42%1668.620073,3642.92%1152.1Data Courtesy of city-data.comSlide13
Loans vs. Population Trends
Why Loans vs. % Change in Population?
Represents new homeowners
Shows not all increase in loans due to new residents.Sharp increase starting in 2003, start of housing boom.Peaks and falls in 2007 due to housing bust.Numbers unavailable for past few years, but overwhelmingly likely Loans / Change in population value still low.Slide14
Conclusion
New homes built, Durham was hit an average amount. Not lightly, not as hard as other areas.
Overexpansion in the housing market caused a decrease in the Population / housing unit ratio. Foreclosures are driving the ratio back upwards.
Loans vs. % Change in Population shows that the expansion in the housing market during the boom was not just all new residents, but also first time Durham homeowners.Slide15
Questions? Comments?
Thank you for listening.
At this point I will be willing to answer any questions or comments you may have.
Sources“Durham, North Carolina.” City-Data. Advameg Inc, 2010. Web. 2 Nov 2010. <http://www.city-data.com/city/Durham-North-Carolina.html>.
“Building Permits.” Censtats Database. US Census Bureau, 2010. Web. 2 Nov 2010. <http://censtats.census.gov/bldg/bldgprmt.shtml>.