ABC lists the eight worst towns for foreclosures, and all but two are commuter towns in Nevada or California. The price run up was based on high housing demand in Los Angeles and the Bay Area. Two cities from Florida make the list, but it was mostly a West Coast phenomena.
The problem was the same mismatch that the Euro has, a yield curve that covers an entire nation while real rates vary from region to region. Couple that with the sudden appearance of the on-line mortgage industry and one has a recipe for a 'carry trade', appling low rates where they shouldn't be applied. Information Shock. As I have pointed out for several years we have a dysfunction between information and transportation. Nevada probably lost $8 billion in mis-allocated housing funds by folks who though they had the commute handled.
The solution is going to be ery High Speed BRT along I-15 and I-80, as I have pointed out. I can bet $100 that within two to three weeks Very High Speed BRT will be a hot topic among Nevada politicians.
We are back again with Krugman's Stranded in Suburbia
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