Friday, October 27, 2006

Sacramento Housing Bubblette?

From the Daily Bulletin:

Regional economist Jack Kyser of the L.A. County Economic Development Corp. noted the contrast between the California market and the national one.

"There are definitely bubble markets nationally," he said. "We have bubblettes in California - folks are worried about Sacramento and the Central Valley - but we don't have anything like Las Vegas or the Florida condo market."

Kyser said two factors were keeping California housing relatively strong.

"Our economy is doing well and the population is still growing," he said. "The demand is there. Yes, it's a shift to a buyer's market where prices may flatten some, but anyone looking for a blowoff like the early '90s, forget about it."
Hat tip: HB Blog

4 comments:

rocklin renter said...

Hello, my name is Jack Kyser, and despite the fact that I am an "economist", I will use logic that defies the very fundamentals of economics to justify my job of pandering to those who stand to benefit from my report.

You go Jack! Don't let that pesky Econ 101 stand in your way!

Anonymous said...

" . . . it's a shift to a buyer's market where prices may flatten some, but anyone looking for a blowoff like the early '90s, forget about it."

I wish there was an easy way to keep track of these famous quotes. There's nothing more satisfying than putting the remarks of these so-called experts in the archive for a few years and then pulling them out again to see how they've aged. In parentheses, next to their name and what they said, we could insert their salary to see if there's any correlation at all between how much they're getting paid and how accurate they are.

Anonymous said...

Yep - and last year they were predicting high single digit price apprecation. Folks like this are the last to admit we are rolling down a hill - speeding up as we go.

Kasual Observer said...

The wheels are coming off the wagon

Anyone thinking that we are bottoming out already should check the referenced graph on Japan and housing prices. Or take a look at how long it took to recover in the 90s in the U.S. As a real estate broker and interested observer,I may have a little better ackground to judge. Besides that, I don't currently own a home - so no dog in this fight.

My view is that "The wheels are coming off the wagon." The run up
in prices has been so fast and furious, abetted by loose and crazy financing, that the blowoff
will tend to be as wild as the
ridiculous appreciation in the past
5 years or so.

We are living in a parallel universe without any connection to
reality. Why, for instance, would
any sane person obligate themslves
to a 250-300k mortgage to live in
a 3BR 1 Bath home with a flat roof
and single car garage with maybe
1100-1200 sqft? You come home at night and the garage is so small you barely have room to squeeze out
a partially opened car door. You
maybe even have wall heaters and wall A/C. Who needs it? Why not go
rent a larger place or a nice condo and forget the "American Dream" of home ownership, at least for now. To me, the dream looks more like a nightmare.

What's the rush to "come off the fence and buy"? Prices may go down for years. Wait till they start tightening up on financing (which has supported this pricing
explosion). And they almost have to tighten up because lenders are
going to be taking back lots of homes. Add to that the adjustments to ARMs that haven't even started in a meaningfull way.

Optimists point out that we don't have a job crisis. Maybe. The layoffs are well underway in RE related fields (lenders, title companies, etc). Real estate agents are taking a huge whack in income. And then there's the home inspectors and appraisers and escrow officers and...the list goes on. I didn't even mention the building/construction trades.

Check the article and graph on this article for an eye-opener on the Japanese asset bubble. It has
gone on for 20+ years. And we have articles in the national press on "bubble proof cities".

http://en.wikipedia.org/wiki/Japanese_asset_price_bubble

I could go on for a week, but since this isn't my blog I'd better quit for now.