Posted on 06/21/2005 8:12:55 PM PDT by Flavius
SAN FRANCISCO - California has a housing bubble, but it may not pop with a bang, UCLA researchers said in a quarterly economic forecast.
“There is no reason that a house should be worth 40 percent more today than it was two years ago,” UCLA Anderson Forecast economist Christopher Thornberg wrote in a report. “This is a bubble.”
(Excerpt) Read more at msnbc.msn.com ...
It's a simple case of supply and demand. There is far, far more demand than supply.
Completely out of control.
Except for this little thing called The Law Of Supply And Demand.
You see, Professor, people continue to move to California in droves (that's the demand side of the equation) while bureaucratice red tape, onerous Worker's Comp regulations, environmental regulations and other "intangibles" inhibit the ability to build houses fast enough (i.e., supply).
Don't they teach you nothing at UCLA?
I don't foresee the prices going down. They can't build these houses fast enough. As soon as they start building new housing tracts, the homes are scooped up and sold.
This is good news: it means the MSM has exhausted its latest attempt to cause another Vietnam while it switches to trying to talk us into another Depression.
If long term interest rates rise, housing will go down everywhere, no exeptions.
If it crashes, would you advise buying property there?
While no real estate speculator at all, me thinks that the Housing Market exploded due to cheap Money.
When the FED's kept the interest rate artificially low, getting a load of money for cheap was the norm;
now, which way is the easy and understandable path of investing your hard earned/borrowed money?...yes, real estate!
No wonder the LA Compton shit holes shacks are selling for up of 300k.
This trend is not limited to LA, it is a nation wide dilemma.
WSJ and many other experts are warning for the "POP".
I will be waiting...
Demand is high, costs to build a new house is high, getting permits to actually build a new house is very difficult in some places and if you are talking about building a sub-division count on years getting it approved. One of the reasons housing is going up all over, not just CA, is because of the fact we can't log in this country anymore. Oh, we can do some logging, but not to the extent we need to in order to keep up with the demand. The bubble may burst if the interest rates go up but the bubble is here to stay for the most part unless evironmental laws change in the state of CA.
If you have the ability - YES
This endless talk in the media and the fact that they can never call major economic moves has me convinced that either there is no bubble, or there is a bubble but it won't deflate for years to come.
Meanwhile here in southern Indiana, you can still buy a decent 3 bedroom house with basement and 2 car garage in a good neighborhood for <150,000. I bought my house in 1999 for 117,000; a real estate agent tells me I might be able to get 135,000 for it now. The gap between rents and home prices here (Louisville, Kentucky area) is not big. I gather that is a good measure of the real value of a home in a market. At any rate, it seems to me that when people start saying the laws of physics have changed, that's when the correction will happen.
"unless evironmental laws change in the state of CA."
I love Arnold - but this is not going to happen.
The way to buy property in Nor CA BA is to band together as the Asians, Blacks, hell everyone - and buy as a group - allocating each purchase to the lucky one who will live there - profits split on sale.
And the demand will only grow. It's not going away.
Thornberg should come to Sarasota, Fl where the median price rose 40% in the last 12 months. Buyers are undeterred and just keep driving prices up further. Demand is huge while inventory is low because few want to move to a another home and assume the huge jump in taxes.
Price growth may flatten but long term demand will continue to grow and prices right with it.
You are exactly right. The last I heard was that the demand falls behind the supply by over 2000 housing units per year due to all the red-tape associated with development in CA. It will not get any better soon. The outer lying areas of So Cal (I assume most metro areas) are building as fast as they can and the "I wouldn't live there in a million years" areas are starting to explode with growth. The market may settle a little but there will be no bubble burst. IMO of course.
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