Top States in the US Experiencing Population Growth Between 2000 – 2010
Jr.SANTA CLARITA, CA, USA | Wed Aug 22, 2012 9:36 am PST During the last decade from 2000 – 2010, the United States experienced a population shift driven largely by the real estate boom. Historically in the decade prior to that from 1990 – 2000, the population shifted due to drivers such as employment opportunities in the technology field that causes population expansion in places such as Redmond, Washington, Palo Alto, California, San Jose, California, Irvine, California, and even Dallas, Texas. The growth had more to do with people relocating for better employment opportunities and higher wages in the technology sector more so than what occurred in the following decade. During the decade depicted in the chart to the left, the change in population from 2000 – 2010 was driven largely by cheaper housing first and jobs secondly. The state of Nevada experienced the highest level expansion in the percentage of population growth. The implications are that the Baby-Boomers had an impact on the numbers in that the largest percentage of them retired within the 2000 – 2010 decade. Also, there was another component contributing to this growth, the lowered-bench-mark for consumers to qualify for new home mortgages. Through this decade, The September 11th Tragedy occurred that shook confidence in the markets, The Technology Bubble had burst and investors grew weary after spending unwarranted billions in preparation for The Y2K Scare. Mortgages and real estate had always been a fall-back for investors to safely hold capital throughout crises in the past. The thinking was that the mortgage-banking industry was a sure bet. As capital accumulated with these industries, the building of new homes increased as cheap land was purchased in out-of-the-way places that required the development of new communities and infrastructures to be put in place to accommodate the growing populations. Nevada had more land at cheaper overhead for developers, along with allure of no state tax for consumers and lower operating expense for business. Migrations began from California and other states that required a higher cost of living. Also places like Nevada and Arizona appealed to the retiring population that would retire to a more fixed income category. This surge in population to the ten states listed in the legend had more to do with per-dollar-value that correlated in jobs and lower housing expenses. During this period of transition, the logic for many consumers was to purchase a single-family dwelling before renting to even though the terms may have involved balloon payments or variable interest-rates. The temptations of flipping homes and purchasing multiple properties and leasing them out were considerations despite the gross lack of real estate expertise many consumers possessed. Another contributing factor for expansion was the amount of capital that sellers in wealthier parts of the nation had after selling their homes and buying in areas where the cost were considerably lower. This created price-pressures for consumers to buy in at a price that was grossly over-valued or appraised. By the last quarter of 2007 the nation realized it had jumped-the-shark on valuations of mortgages and derivatives associated with them. The problem for most investors was that many of them did not know exactly how much the mortgages were worth in comparison to the intrinsic-value of the homes. However, buy this time institutional investors had themselves bound to them including other international lending institutions. Consumers were faced with another problem because the interest-rates reset before many of them could sell and discovered that fore-closure was feasible. The push for lenders to push demand they had created by increasing supply in the earlier part of the decade proved to be nothing more than self-inflicted. Even though there were apartment dwellers wishing to move into a single-family home or those in single family homes will to seek larger residences, only a small number could actually afford to do so according to the criteria of the decade prior. The demand was not great enough to require the expansion in home development that occurred. Instead, the banks assumed that if the developers built these new master-planned communities the consumers will come. The problem was they did not at first until loan qualification standards were lowered enough to attract mass numbers of consumers. Also, expansions on existing properties occurred under these terms that allowed many to combined cyclical short-term debt such as credit cards, car-payments, student-loans and the like to be paid off. Others were refinanced for more than the properties were worth and used the balance for discretionary spending. On March 13th, 2008, the United States realized that it had created a systemic global recession based on this supply-side strategy in the housing and mortgage industries. When we look at this chart in 2012, the population numbers have not changed much, but the number of foreclosures and the amount of families upside-down on their mortgages are reflected in the high numbers of the population expanding into these ten states. Massive lay-offs from 2008 and beyond left many consumers out of work, working for fewer wages, and in some cases stuck in cities and communities that are of no economic benefit to remain. Others that have moved to many of these Right-to-Work states realize that the lower cost of living and lower wages are pointless in the face of a raised mortgage payment. In conclusion, the whole economic crisis that began in the mortgage industry stemmed from the banks creating a demand by supplying housing as a shield to protect the economy after September 11th, 2001 and by flooding the market with homes, they had over projected the actual number of qualified applicants to fulfill this demand. The end result was to allow under-qualified consumers to participate in the real estate market much like the European Union did by ignoring the fact that Greece did not have the strong economy to qualify as a member. In the end we have vacant residences, ruined credit reports, divorces, suicides, displaced families, and over-dependence on government services , and municipalities struggling to collect revenue from property-taxes while being tempted to borrow large sums of capital over extended periods at rates unheard of in previous memory. This adjustment to deal with a domestic issue in the earlier part of the decade had consequences that continue to resonate throughout the economies of the world today.