Yes, Texas was hard hit. However, some of that is attributable to change in legislation which pulled the rug out from under a lot of developers. This not only popped the bubble but added to the resultant downside. I don't remember the specifics on the legislation.
Probably allowed more developments to go ahead. Its not really surprising that in a nation who added over 4 million people last year.... yet only allowed limited development, that property prices would invariably rise.
Yes, Texas was hard hit. However, some of that is attributable to change in legislation which pulled the rug out from under a lot of developers. This not only popped the bubble but added to the resultant downside. I don't remember the specifics on the legislation.
The Texas bust started out as energy related then Congress changed the rules in '86. Previously many types of real estate deals were treated favorably for income tax purposes. Basically you were taxed less so a smaller pre-tax return on investment wound up being a larger post-tax return on investment.
As a part of the (the name escapes me) tax reform bill Congress put an end to much of that. Well and good, ecept Congress didn't grandfather existing deals. Lots of real estate deals had been put together not because they made sense as real estate deals, but because they made sense as real estate deals given their tax advantages, which Congress had just taken away. Given the double whammy of regional recession and Congressionally caused recession you woulnd up with a collapse of prices, especailly in commercial real estate.
The rate of relief from taxes due to "depreciation" was changed. I lived in Austin at the time and there were 14 high rises under construction becuase if you had sufficient tax liability elsewhere, you could build a high rise and leave it vacant and still come out ahead on the depreciation benefit. When it was changed, many of these high rises stopped work. Companies backed out of deals to move to Austin, and I had to sell a house for half of what I paid for it. Ouch. Never had that happen to me in California, but it may happen there soon.
Of course it will not happen if California continues to be the job engine of the recovery. Jobs mean the bubble is sustainable.