Those who don't think there is a huge So Cal housing bubble - explain this

[turbo6bar]

Realty Times Market Report for San Diego, by Realtor Bob Casagrand

You can read the report to get your fix, but prices are coming down, and inventories continue their incredible climb. It would take over half a year to whittle away that inventory. Higher borrowing costs and changing buyer sentiment will likely make third and fourth quarters equally disappointing or perhaps worse.


I know, I know. LA is different from San Diego. San Francisco isn't San Diego. I'm just presenting the facts.

[nostatic]

The problem is his numbers are an overview of all of SD county. That is a BIG place with a ton of micro markets. In SoCal you really need to break things down by neighborhood. I agree that inventories are climbing and prices are falling, but the numbers and rates vary wildly depending on location.

[turbo6bar]

Now, a CAR economist is turning bearish...

LA Times article--Housing Expert: 'Soft Landing' Off Mark

Leslie Appleton-Young is at a loss for words.

The chief economist of the California Assn. of Realtors has stopped using the term "soft landing" to describe the state's real estate market, saying she no longer feels comfortable with that mild label.

"Maybe we need something new. That's all I'm prepared to say," Appleton-Young said Thursday.

"I'm sorry I ever made that comment," she said Thursday. "When I get my new term, I'll let you know."

Appleton-Young had no qualms about predicting a hard landing here: "We're expecting a fairly significant shakeout."

The danger of such statements is it will tend to make some fence-sitters thing long and hard about buying.

In the Bad RE News thread, I presented some numbers on the effect of home equity extraction on the CA economy. In summary, if equity extraction falls back to 2000 levels, the CA economy will likely go into a recession. Flat to falling housing prices and rising interest rates discourages equity extraction, so 2005 is likely the peak of the cycle.

[Moses]

And yet, our East Bay prices continue to climb;

http://www.bizjournals.com/eastbay/stories/2006/07/17/daily29.html

[CarreraS2]

Originally posted by Moses
And yet, our East Bay prices continue to climb;

http://www.bizjournals.com/eastbay/stories/2006/07/17/daily29.html

"The Bay Area's market is reaching the end of a real estate cycle. It looks like prices could flatten out sometime this fall. What happens after that is anyone's guess," Prentice said."

It's not hard to guess. It's going to be like all cycles.

Sales slow down (already happening in East Bay according to the article).

Inventory builds up (likely already happening).

Prices drop.

[Moses]

I agree. The prices have to drop. The reason they have appreciated despite the paucity of buyers is that there are not a lot of pressured sales in the area (yet).

[tabs]

By the time it gets reported in the media it is allready a done deal.

When they say we are GOING into a recession we are allready in one.

[CarreraS2]

Yup.

Right now, the media is saying the economy is slowing.

Which means it has already been slowing.

Next stop, the "R" word in the media. Coming soon.

[Porsche-O-Phile]

Didja catch Bernake's comments about "soft landing" earlier? He's trying like mad to force that "self-fulfilling-prophecy" principle of economics to work. I bet he has his fingers crossed bigtime - if it does anything other than drop 50% in the next two years he can claim "see - soft landing! I was right!" (to varying degrees). And he will thrust himself into the realm of greatness as economists whisper behind closed doors how the markets "listened" to him. If not, he can claim that the slowdown and resulting market decline were necesary to combat inflation (and engage in some revisionist analysis to back up his claim. . .) and pray the public has a short attention span. Probably a reasonably safe bet these days.

[tabs]

I took my Dog for a cruise around the area...I was surprised by home many Custom homes are for sale.

[Porsche-O-Phile]

I heard mention of a report the other day on the radio in which it said that certain markets are poised to lose up to 50% of their value over the next 2-3 years. Anyone else hear this or read it? Know the source? I'd be curious to see the entire report.