[jyl]

People have all forgotten the CA RE downturn of 1990-1994? Only a decade ago, but it can't happen again?

Edit: a few numbers in case anyone is interested.

In Los Angeles, from 1980 to 1990, average house prices grew +130% (appx +8.7% a year, compounded). From 1990 to 1995, average house prices declined -22%.

I was a homeowner in the LA area at the time, and recall foreclosure signs on every other block, homes sitting unsold for years, and house prices going down much more than -22% in some cases.

In San Francisco the 1980 to 1990 growth was about +140% (+9.2% a year, compounded). The 1990 to 1995 decline was smaller, about -10%.

(The home price data is from the federal OFHEO agency as of 4Q04.)

During that 1980 to 1990 period, the S&P 500 rose about +210% (about +12% a year, compounded). From 1990 to 1995, the SP5 rose about +54% (+9% a year, compounded).

(The stock market data is just eyeballed from a chart).

In Los Angeles, from 1995 to present, average house prices have grown +120% (+8.2% a year, compounded). In San Francisco, average house prices have risen +125% (+8.4% a year, compounded).

During that 1995 to present period, the S&P 500 has risen +113% (7.9% a year, compounded).