John Fout
In fact, Frey has a specific term for the Northeast and California coastal area: "gated regions." Home-price increases created entire regions that excluded new buyers from purchasing in these regions. This explains some of the migration to states such as Arizona, North Carolina, South Carolina and Texas. Frey calls this a "flight to affordability."
Laffer and Moore would be quick to point out that these gated regions have suffered decreases in home prices over the last two years. They have. But they rose higher during the housing bubble and certainly have farther to fall. What Laffer and Moore should point out is that lower home prices offer a good incentive for both corporations and individuals to relocate. It works just like a tax cut or a pay hike. Medium apartment prices in New York City average $1.1 million. Think you could do better in Arizona or Texas? Corporations use many matrix to decide on where to locate. Taxes are important, but they also look at having a stable environment for workers, in particular real estate prices. Cheaper housing costs benefit corporations because it removes pressure to pay higher wages. Workers in California and New York have to earn more to live in those states. There is no doubt that large metropolitan areas in gated regions have very high local and state taxes. Furthermore, these taxes often pay for the higher costs of social programs, such as Medicare and Welfare. It is certainly a big negative. But home price appreciation proves to be a silver lining. If you bought real estate in those areas, it worked out to be a much better investment than in the South or Southwest. Migration might have an unintended consequence that Laffer and Moore wouldn't appreciate. As more lower- and middle-class families are forced out of gated regions, they move to red states like Arizona, Nevada, North Carolina, South Carolina and Texas. The infusion of liberals from blue states could change voting patterns. Red states might turn purple. We will find out soon enough.
RSS
