Tuesday, May 20, 2008

El Paso - anatomy of housing boom and bust

The following is a typical anatomy of a housing boom and bust: example, Texas-Mexican boarder town El Paso

When an independent commission recommended military base closures and realignments in 2005, the area was relieved to learn that nearby Fort Bliss wouldn't have to shut down. In fact, it would receive an influx of troops and families.

Since then, the area has begun to prepare for the arrivals. Initially, it was supposed to be 11,000 soldiers; the figure has since grown to about 37,000, says Dan Olivas, president of the Greater El Paso Association of Realtors.

The local housing market benefited immediately. After the Fort Bliss announcement, "People jumped on the bandwagon," says James Gaines, an economist at Texas A&M University's Real Estate Center. "It created this boom mentality, and things went really well for a while."

Investors, particularly from California, rushed in to buy homes, Olivas says. Prices shot up. Then reality set in. The investors had trouble unloading their homes at a profit, once it became clear that Fort Bliss wouldn't absorb an influx of troops for some time.

source: El Paso: Home sales future looks promising

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