Ever since one of our favorite local housing economist, Chris Thornberg, left the UCLA Anderson Forecast, we have been left wanting for substance, critical thinking, and hard data from the remaining group that we used to get from Chris. No such luck.
In its place, we have a sunny disposition, mixed with happy-talk and crossed fingers. San Diego, in the throes of its worst real-estate slump in history, does not need happy talk. A discussion of return to fundamentals mixed with a healthy sense of actions needed to return to some semblance of attractiveness for citizens are required when you median price is falling at record levels.
All of this present-day bloodbath doesn’t stop the group from trying to turn up roses from the whole affair.
Consider first of all, the title of the article: Housing Rebound Forecast, yet risks lurk.
San Diego County’s housing market will continue to be flat for at least another year, and it could get worse before it gets better if spiking foreclosures dump a large number of properties on the market, an UCLA economist said Tuesday.
In the middle of 2008, however, the market is expected to rebound, said economist Ryan Ratcliff, who specializes in regional forecasts for the closely followed UCLA Anderson Forecast.
“I think you’ll start seeing light at the end of the tunnel next year,” Ratcliff said.
Consider that for a moment.
First off… the region’s market is far from FLAT. Flat means that volumes and/or prices are not on a downward tear. (They both are). Mix in the recent subprime meltdown and general tightening of credit, and you’ve got to be a zombie (or some other form of walking dead) to not see the future is at best grim for real estate. Prices won’t be in line with fundamentals without at least another 25% drop, and volume (a primary short-term predictor of prices) is still dropping like a lead balloon.
The best that the economists at UCLA can offer is that it “might” bottom out at the end of next year. That’s a sad state of affairs for a bottom-caller. The scenario that is portrayed (increasing foreclosures and defaults) is a foregone conclusion. With the bulk of ARM resets and Pay Option recasts ahead of us, we’re likely to see much, much more downward pressure.
Sorry for these bottom callers, this canary is dead.
Jim the realtor had the volume as down 50% from the peak on his site.
I’d venture that we are still early in this cycle, so that is quite impressive.
Also some states are pressing for that moratorium on forclosures. I would guess the voices are getting louder in California.
Yep. Just read an article in WSJ that predicts a continued drop for AT LEAST another 12 months… Time to pay the piper.
Andrew
http://www.InvestorReviewPodcast.com
Quite gratifying, really, to see the local housing market fall on its face. It’s something I’ve expected for a long time, so the experience is really terrific!
O, luscious foreclosures
O how thou temptest me with thine glorious delights!
O inventory how doth thou warm my soul.
O defaults how thou doth please me with the warm milk from thy breast!
These realtors and economists say 2008 is when things might turn around only because they cannot see more than a few months ahead. Personally, I’m on record thinking that 2008 (after the Chinese hosted olympics) is when the real crash hits as then China will have just that much less reason to peg the yuan to the dollar. I’m thinking no longer supporting low long-term interest rates. Just my inflation adjusted $0.02.
It’s getting interesting on Craigslist these days. Anecdotally, I can say that I am seeing many more “pre-foreclosure” listings than just a few weeks ago. There is a big REO auction for SoCal coming up in the middle of this month and this will likely be a bellweather event for future pricing.