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Although the numbers make sense it seems that would be devistating for CA economy.
The LA Times has this on the Califorian housing market. "Housing starts dropped sharply in November in most of the state's major metropolitan areas, led by steep declines in single-family home construction, the California Building Industry Assn. said Tuesday. Single-family home construction, which accounts for the bulk of California's new housing activity, fell 17.2% statewide in November compared with October, and tumbled 18% from a year earlier."
"Single-family housing starts fell 23.3% in the Inland Empire in November from October, 23.8% in Orange County and 24.1% in the San Diego region. However, the Los Angeles-Long Beach metropolitan area posted a 3.3% increase for the month. Including the construction of multifamily units, housing starts in California totaled 14,021 in November, down 5.3% from October, and off 23.6% from a year earlier."
"Local prices in the resale housing market have leveled off in recent months, and that has prompted many sellers to pull their homes off the market. As a result, new-home builders are 'very cautious,' said Alan Nevin, chief economist for the state building association. One reason builders in California were reluctant to start many single-family projects last month was because there was an ample supply of unsold homes, Nevin said."
One California market analyst is turning pessimistic. "Robert Campbell says that his biggest concern about the California housing market is creative financing. Campbell writes, 'Creative financing can be very dangerous when the price of the asset loses significance. People start believing that it doesn't matter whether a home sells for $200,000 or $400,000 because the monthly payment is the same. Sorry, but when mortgage loans are based on fictional values as opposed to true values that are supported by economic fundamentals, financial bubbles can develop that eventually implodes.'"
"Markets are mean-reverting, which he says explains why booms are followed by busts. Prices will fall and revert back to true economic value if they have become overvalued in a boom. California homes are overvalued, he says. 'In September 2005, the median price of a CA home was $544,000 and the median household income was $60,300. This puts the P/E ratio at 9.4, which is a level of extreme overvaluation based on 26-year norms. From 1996 to 2005, CA home prices rose by $366,000, a phenomenal 305 percent rise, while CA incomes rose by $17,000, a 40 percent rise.'"
"To calculate how housing prices would fall if they were to revert back to the 26-year average for the P/E ratio, Campbell multiplies $60,300 by the average P/E ratio of 5.2. If the market reverts to the mean, housing in California should cost about $314,000, which makes it susceptible to a stomach-lurching 42 percent drop."
"'Pushed to extreme levels of overvaluation by greed and easy money,' writes Campbell, the California real estate market is now a bubble. When a bubble bursts, history shows that, at a minimum, prices will retreat back to levels that are consistent with long-term norms. Sometimes, however, over-inflated asset prices fall to P/E ratios that are below the long-term norms, when this happens, the stage is set for the next great buying opportunity."
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That would suck for a lot of people.
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Time to get the check book ready :skull:
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Never going to happen....
Drops yes but 42% would be highly unlikely.(I will keep my fingers crossed as I will be ready to buy several investment properties )
Also where are all of these new start homes in OC/LB?
I know of less than a handfull of new homes being built in Orange County.(Land is becoming harder nd harder to find here)
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Never going to happen....
Drops yes but 42% would be highly unlikely.(I will keep my fingers crossed as I will be ready to buy several investment properties )
Also where are all of these new start homes in OC/LB?
I know of less than a handfull of new homes being built in Orange County.(Land is becoming harder nd harder to find here)
yep, i got two in mind also, whats all this gonna mean to me??
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Who knows.......
it climbed thru the roof, it can fall right back in just as quick
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no way no how.......people keep breeding and they keep jumping borders..housing will always be at a premium......i just hope some of ya didnt take a second or third out on the house to buy a boat, :rollside:
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no way no how.......people keep breeding and they keep jumping borders..housing will always be at a premium......i just hope some of ya didnt take a second or third out on the house to buy a boat, :rollside:
If it just kept going up why not use the house? Contradiction? :)
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...i just hope some of ya didnt take a second or third out on the house to buy a boat, :rollside:
Im sure NO-ONE on here would ever think of doing that.....
Everyone is Rich just ask them
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I better hurry up and refi so I can order a F29 before the market crashes!!!(I have 250K worth of equite burning a hole in my pocket)
Hopefully it will turnaound again before my interest only 5 year arm blows up. :p
