Tuesday, August 20, 2013

Housing bust and beyond

Speaking of real estate......   So it is a common refrain that Pittsburgh escaped much of the last recession because we never had the housing bust common most everywhere across the country.  That is likely true if more description than explanation of anything.  At the very least, the question of why we did not have the housing bust will be studied for a long time in the future.

But there is some new research that puts a little more analysis behind the stylized fact.  A neat bit of regional benchmarking is published recently by the Department of Labor in their Monthly Labor Review.  See: The relationship between the housing and labor market crises and doubling up: an MSA-level analysis, 2005–2011.

The authors look at all metro areas, but focused on 25 metros including Pittsburgh.   Indeed for most regions a regional housing bust precipitated a greater employment crisis.  Except for Pittsburgh and just a few other regions the housing crisis came after a regional employment decline.  In their analysis, Pittsburgh had a 3 month lag from the peak of the employment crisis until when the housing crisis finally set in, the longest lag other than Dallas in that direction. Basically, the financial crisis that the nation was going through so clogged up credit that the impact became unavoidable here in Pittsburgh.  Also in their data, Pittsburgh hung on longer than any region other than Houston before employment decline set in (3rd quarter of 2008 for Pittsburgh, tied with Washington, DC.) Houston's employment decline came in the 4th quarter of 2008.


Anonymous BrianTH said...

We had no housing bust because we had no housing boom. We had no housing boom because we had no reason to have a housing boom. I have no doubt that won't be enough to satisfy many people, but I think that general outline will in fact apply.

I also think it is pretty obvious there would have been no recession here if not for the contagion from outside the region, again because there was no other reason for there to be a recession here.

Tuesday, August 20, 2013 8:26:00 PM  

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