So Exurbs Hard Hit by Slowing Market – Crossland Team

Exurbs Hard Hit by Slowing Market

The article below supports what I preach constantly to buyers in Austin, notwithstanding our strong current market – stay out of the far-flung areas and instead buy the best home you can afford closer in. And from the article below, this instructive quote: “But speculative investors — rather than buyers who planned to occupy the dwellings — accounted for a majority of exurban sales in recent years.”

These investors who bought in the outskirt areas of Florida and California in particular are losing their shirts now because they chased better cash flow into outskirt areas instead of sticking with the established bread-and-butter areas that appreciate better. Home owners in those “exburb” areas are now also stuck upside down in homes worth less than what they owe, and a large portion of their neighborhood is renter occupied.

You may ask: But won’t Austin’s current and coming boom years take care of that? I wouldn’t bet on it. We don’t sell to investors in outskirt areas because we don’t think it’s the right place to buy, and the article below explains why.

Source: Reuters (02/06/07)

Suburbs farthest from the urban core, also known as exurbs, are experiencing more dramatic drops in home sales and prices than close-in suburbs.

Ever since the five-year U.S. housing boom ended in the summer of 2005, home construction in these distant exurbs has slowed and prices and sales have fallen more than those of suburban neighbors. Economists and real estate professionals say builders created too much inventory in far-out areas, expecting that buyers would eventually come.

The Northern Virginia Association of REALTORS®, for instance, reports an 11 percent drop in the average home price in Loudoun County last year. On the other hand, the average price in Arlington County — which is closer to Washington, D.C. — registered a more modest decline of 2 percent.

The same trend is seen in California and in Florida.

Brad Hunter, director of Metrostudy’s South Florida division, says construction in the far-flung suburbs came in response to robust price appreciation. But speculative investors — rather than buyers who planned to occupy the dwellings — accounted for a majority of exurban sales in recent years.

Posted by Steve
11 years ago

Steve is a Real Estate Blogger, UT Austin Grad, Real Estate Broker and owner of Crossland Team and Crossland Real Estate in Austin TX.

Click Here to Leave a Comment Below

josh - 11 years ago

wait til the real oil crunch happens sometime in the next 20 years. Property values in the exurbs will plummet.

Leave a Reply: