Following any housing boom, you will hear the familiar claim that a housing crash is imminent. However, this is more based on flawed logic from "experts" who are parroting other "experts" who are simply citing historic trends on a national level. However, standard historic trends based purely on past housing booms are not sufficient to explain the current situation due to differing variables in the current market place and varied regions across the country.
The first thing to consider is that all housing is local. So although the greater economy will affect housing trends, the economic activity in your local market is the real indicator of whether there will be a housing bust that will affect you. For example, the recent collapse of Silicon Valley Bank will have a global impact, but it will affect the tech sector first and foremost. The people in this industry and in heavily technology-based regions will be affected as they navigate through the banking collapse. This will cause people to need to sell homes and relocate or downsize. So, this will very likely affect home prices in the related areas. If people in related regions and industries are overleveraged, they will need to sell their homes. If multiple people put their homes on the market at the same time, there will not be enough buyers. This will cause the housing prices to drop in the related areas.
With respect to our geographic region, we have a completely different economic base than the heavily tech-invested areas, for example. Here are just a few reasons why we are different. Our primary job creator in our region is related to state and federal government. Due to our young population, relatively low economic income levels, and geographic orientation on the border, we have a disproportionately high level of government employees relative to the overall population. Being on the border with Mexico creates an intense level of Law Enforcement employment, and we benefit from cross-border trade. Whether the national economy is weak or strong, south Texas benefits from cross-border trade. If the economy is strong in the US, we buy goods and pull labor from Mexico. If the economy is good in Mexico, they buy goods from us and travel in the US.
In addition to being heavily government and border-related in our region, in Brownsville, we now have the benefit of having SpaceX. Brownsville is fortunate to have a seaport, an international border, and now we are a literal Space Port! Throughout history, regions of trade and ports to exploration tend to do well regardless of the national or global economic climate. For example, the Space Industry is projected to be a 1 Trillion dollar industry. With Brownsville now being one of the very few sites that have a Space Port, we are destined to get a share of that economic activity. And even a tiny bit of 1 Trillion dollars is an astounding amount of money. For example, due in large part to SpaceX's development in Brownsville, our economic activity due to private investment jumped from $212,000 Million in 2021 to $425,000 in 2022. As you can see, this is over double! It is literally more than a 100% increase in economic activity. By any measurement, this is absolutely astounding.
Being a hub to international trade and a frontier to exploration puts us in a unique position to weather an economic storm more than almost any region. When there is economic instability, people with money look for other places to spend money. One such place to do that is Trade and Exploration. Trade and Exploration expose potential investors that are high risk but high yield, especially when it comes to exploration. This is why in the past, you saw the Kings and Queens of the great powers of the past send their explorers on unthinkable missions. Their goal was to expand their wealth and influence. In doing so, they spent money which stimulated economic activity in the affected regions.
Despite the concerns about a housing crash in the wake of a housing boom, it's important to understand that the situation is more complex than historical trends suggest. The economy of a particular region, as well as local factors, play a crucial role in determining the housing market's health. In the case of our region, we have a unique economic base that makes it more resilient than others, even during tough economic times. With its proximity to Mexico and the presence of government jobs, cross-border trade, and SpaceX, our region is well-positioned for continued growth and prosperity. As long as we stay vigilant and continue to leverage our strengths, we can be confident in a stable housing market and a bright future for our community.
Craig Grove
GRT Realty/RGV Living
Image Credit: MPAMag.com
No comments:
Post a Comment