Where Not To Invest II

 Two people I've interviewed in the past week had interesting comments on the same topic. One man was a research economist with Texas A & M. The other was a Colorado-based hard money lender.

 The economist (Jim Gaines) and I discussed the long-term outlook for the Dallas-Fort Worth area. He mentioned the area will continue to do well with a diversified economy and one to two percent job growth. He also mentioned areas that won't do well: the northern fringes of Dallas-Fort Worth, specifically newer communities.

 The hard money lender (Mark Stevens of REIN Mortgage) and I discussed where he won't loan money. While that changes from day to day, depending on reports, Sun Belt perimeter communities are a bad risk in general, he said.

About a month ago the New York Times reported on Texas "exurbs" (a place that's farther out than a suburb) going into steep decline. "Unlike many other states with housing troubles, Texas as a whole is booming, continuing to attract new residents and create jobs," reporter Leslie Eaton wrote. "But across the state’s outermost exurbs, formed by waves of new housing, building has ground almost to a halt. "

(You can read the whole story here.)

This morning a story in the main Arizona daily said perimeter communities have been the hardest-hit in the Phoenix metro area (complete story here).

"New-home communities in the West Valley that led the local housing boom for sales are now plagued with the Valley's highest foreclosure rates.

"Eight of metro Phoenix's top 10 areas for foreclosure rates are on the Valley's west side, according to an Arizona Republic analysis of data for the past 13 months from the Information Market."

 Two that weren't in the West Valley were a posh area called Cave Creek (a surprise to us) and an exurb that's ridiculously far from the urban core - Queen Creek, where a commute downtown can take an hour and 15 minutes. It's 45 minutes just to get to the freeway from Queen Creek. (Southern Californians reading this are thinking, 'Well that doesn't sound bad at all.')

With the dollar approaching parity with the peso and the concomitant and inevitable appearance of the $4 gallon of gas, perimeters look even less attractive (either from an investment or resident viewpoint).

Invest in urban cores.

Scott Seckel, Editorial Director, NEXZUS Publishing

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