Housing slowdown, state woes are forecast
The newspaper basically said what I’ve been saying for the past 12 months. 50% of all new jobs in CA created since 2001 were real estate related and if the RE market tanks, it’ll take the whole state’s economy with it.
I’m banking on this happening and the signs are all there. DOM is trending up, inventory is trending up, prices are trending down and
last year was the first time we saw a negative population net migration.
I think we’ll hit the bottom between 2008 and 2010 when all the people who couldn’t afford homes and still bought them with 3 and 5 year ARMs see their loans readjust to a 50% higher payment. The banks will get back a ton of homes and people who have cash will benefit! I fully expect to see a 25-40% drop in prices in different parts of CA,despite fervent pleas from my wife to keep my opinions to myself and stop scaring her friends and acquaintances.
I’m so glad I cashed out of the CA market.
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April 29th, 2006 at 2:08 am
It’s funny… my wife says the same thing to me! As an economist, I can’t help but having a cool head. Although I can’t predict how high prices will go, or when the peak will be reached, I _know_ that such time will come, and then prices will stay flat for some time. I’m not as pessimistic as you are, though. Prices may drop over several years in real terms, meaning, housing prices may be flat, even drop a little, so that they will lag behind inflation. On the other hand, if there is a severe recession in the state (or the nation), or the bets are off, and we could see a 25% drop in nominal (dollars) terms. Interesting times we are living!
November 14th, 2008 at 9:29 pm
Wow…it’s 2008 and look at your prediction!