how durham fared in the recent housing crisis and the road to recovery

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HOW DURHAM FARED IN THE RECENT HOUSING CRISIS AND THE ROAD TO RECOVERY. By Daniel Kindya December 9, 2010 Urban Economics

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How Durham Fared in the recent housing crisis and the road to recovery. By Daniel Kindya December 9, 2010 Urban Economics. Introduction. In mid 2000’s, housing prices had hit all-time high. Subprime-mortgage rates and increased demand for housing led to housing boom. - PowerPoint PPT Presentation

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Page 1: How Durham Fared in the recent housing crisis and the road to recovery

HOW DURHAM FARED IN THE RECENT HOUSING CRISIS AND THE ROAD TO RECOVERY.By Daniel KindyaDecember 9, 2010Urban Economics

Page 2: How Durham Fared in the recent housing crisis and the road to recovery

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.htm

Page 3: How Durham Fared in the recent housing crisis and the road to recovery

ANNUAL NEW PRIVATELY-OWNED RESIDENTIAL BUILDING PERMITS

A measurement of growth

Page 4: How Durham Fared in the recent housing crisis and the road to recovery

DURHAM BUILDING PERMITSYear Permits Avg Cost

1996 997 111,800

1997 1274 123,500

1998 1519 120,500

1999 1554 148,100

2000 1283 152,600

2001 1633 156,300

2002 1590 159,700

2003 1834 163,500

2004 1937 164,100

2005 2176 165,800

2006 2002 176,400

2007 1574 182,600

2008 1082 187,200

2009 739 189,100

Expansion then decline.

Reasons and Foreclosures

Price trend New home value

increasing, old home value decreasing

First time homeowners more affected

Wealthier Durhamites less affected

Data Courtesy of city-data.com and US Census Bureau

Page 5: How Durham Fared in the recent housing crisis and the road to recovery

FOR COMPARISON: KENT COUNTY, DELAWARE BUILDING PERMITSYear Permits

1996 622

1997 629

1998 676

1999 720

2000 854

2001 958

2002 1,447

2003 1,776

2004 2,042

2005 1,970

2006 1,501

2007 1,332

2008 828

2009 732

Why 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 Bureau

Page 6: How Durham Fared in the recent housing crisis and the road to recovery

FOR COMPARISON: MARICOPA COUNTY (TEMPE, ARIZONA) BUILDING PERMITSYear Permits

1996 29,3871997 31,7281998 35,1491999 36,3472000 33,1582001 34,6692002 36,3122003 41,3882004 48,2282005 43,3972006 28,7022007 21,0942008 9,9922009 6,b451

Tempe, 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 Bureau

Page 7: How Durham Fared in the recent housing crisis and the road to recovery

HOUSING UNITS VS. POPULATION

A measurement of availability

Page 8: How Durham Fared in the recent housing crisis and the road to recovery

HOUSING UNITSYear ~Housing

Units 1970 33,0001975 36,0001980 39,0001985 48,0001990 58,0001995 70,0002000 80,0002005 95,000

Trend 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.com

Page 9: How Durham Fared in the recent housing crisis and the road to recovery

POPULATIONYear ~Population1970 95,0001975 100,0001980 105,0001985 120,0001990 140,0001995 160,0002000 190,0002005 205,000

Trend 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,dk

Page 10: How Durham Fared in the recent housing crisis and the road to recovery

RATIOYear People /

Housing Unit

1970 2.881975 2.781980 2.691985 2.501990 2.411995 2.292000 2.382005 2.16

High 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.

Page 11: How Durham Fared in the recent housing crisis and the road to recovery

HOME LOANS GIVEN BY DURHAM BANKS

A measurement of demand

Page 12: How Durham Fared in the recent housing crisis and the road to recovery

LOANS VS. POPULATION TRENDSYear Loans % Change in

PopulationLoans / Change in Population

2000 2,123 2.28% 931.12001 2,285 2.39% 956.12002 2,134 2.11% 1011.42003 2,693 1.15% 2341.72004 3,047 1.60% 1904.42005 3,881 1.85% 2097.82006 4,038 2.42% 1668.62007 3,364 2.92% 1152.1

Data Courtesy of city-data.com

Page 13: How Durham Fared in the recent housing crisis and the road to recovery

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.

Page 14: How Durham Fared in the recent housing crisis and the road to recovery

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.

Page 15: How Durham Fared in the recent housing crisis and the road to recovery

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>.