One of the long running debates I’ve had over the past couple of years has been the direction of home prices in Texas markets. I can’t help but chuckle when I hear the claim that with a great climate and a job market that is better than the national average, everyone wants to move to Texas, which will keep up the demand. When I point out that was the claim for years in Phoenix and prices fell anyway I’m told, “Yes, but Phoenix had a bubble, and Texas didn’t”.
I point out that you don’t need a bubble for prices to fall. Case in point- Detroit. Supply stayed fairly constant as demand dropped, and prices went down. Texans then get indignant and inform me that there’s no comparison- Detroit’s economy is in lousy shape when the economy in Texas is considered the best in the nation.
That may be the case, but I still maintain that it doesn’t matter what causes the imbalance for prices to fall. If you have a lot of supply chasing low demand, prices are going to fall.
I believe Texas to be a victim of it’s reputation as the “last great housing market”. Building continued in Texas when it fell off elsewhere.