Dave wrote on Dec 7, 2005 9:37 PM:Of course this report is unduly optimistic about real estate because they got rid of real estate bears, Ed Leamer and Christopher Thornberg. They expect CA home prices to plateau... I love it! It's exactly what the NAR wants buyers to believe when mortgage payments are 3X rent and the price/income ratio is not just 8, not just 9, but well... over 10 in the bubbliest spots! "A cooling off!" I love it! No mention of the wildly unsustainable fundamentals, 2/3 of originations being Interest-Only loans to unqualified speculators, etc., etc. In the seventh year of the "cooling off" will they start to call it a huge implosion?

Al wrote on Dec 8, 2005 2:14 AM:There is a logic to this. All asset bubbles expand until they reach some final obstacle. In this case, the obstacle is people's ability to buy and then service the debt. The next phase is that the credit which underwrote the asset bubble gets liquidated. These are all bad debts, on a huge scale, and this has to be recognised formally in the financial system. So the final holders of all this bad debt will have to lose money. Alas, this will not be the bankers who extended the loans, nor the people who repackaged them into bonds. It will be the pension funds who bought the bonds. Even more sadly, these funds will be owned by the people who borrowed the money to buy the inflated real estate. So they will get hit in two ways. They will own real estate worth far less than they paid for it, but still have the debts. And their pension funds will be taking the hit from their, and everyone else's, defaults. This is just starting. If you want to see how this works out, read Murray Rothbard's great book on the thirties.

Mark wrote on Dec 8, 2005 6:25 AM:Here are some items left out of the report. Appraisers are now doing negative time adjustments, home builders are over capacity and are laying off, and builders are offering big incentives on November inventory. What ever happened to all of those presold contracts they have booked profit on?

bobybombrs wrote on Dec 8, 2005 9:15 AM:DENVER -- A storm front packing the potential for up to 16 inches of snow pushed into Colorado on Tuesday, bringing with it bitterly cold arctic air that has sent temperatures plummeting throughout much of the Rockies. I am keeping my ca real estate.

basic wrote on Dec 8, 2005 11:01 AM:It is a bubble when the realtor told you that the doubling home price was caused by Ivan. Have you ever heard that the storm can blow up the sand and house price together? I did not find any gold on the street after Ivan.

Quantumwonk wrote on Dec 8, 2005 8:36 PM:I live on the east coast of Florida. Realtors continue boast that the mega high rise condos i.e. Trump towers is rapidly being sold out. What crap! In the course of 4 years, at least 15 mega high rises have been built in my neighborhood that only stretches for 1.7 miles along the Atlantic coast. The majority of the buildings will have 300 units. 15 buildings x 300= 4,500 condo units with starting prices at $900,000 and up.These condos have destroyed the whole ambience of what coastal living should really be about and that's classic good taste. Oh yeah, one of the developers of Trump Towers did admit in the Miami herald that if the units are not sold, he can simply rent those units out.

Nick wrote on Dec 8, 2005 8:59 PM:Great report. However if I just look at history, the YoY return on the housing sector has been 1.2% from 1889 - 1999. Since then a 100% ROI. To get back to historical norms I would expect more than a 2 year decline in house prices, unless the guys mean a MAJOR CRASH. Speculation is stock market is safer than the housing market.

martin wrote on Dec 8, 2005 10:15 PM:i think that RE and stocks behave the same way as far as frenzied inflated values(paper value). Before the 1929 stock bubble burst people were bidding up the value of stocks to unreasonable unsustainable values just like they are in RE today. Artificially inflated paper(ficticious value) wealth is a bad way to sustain the economy instead of savings and corporate earnings and investments. Why don't people view their homes as just a wood frame structure witha roof and walls and a yard instead of a never ending cash ATM money machine. Greed and the short view have warped homeowners minds:and a lack of historical perspective on past bubbles. I wonder if the Fed will take the soft political option of stopping the raising of the interest rates so as to extend the bubble or at least soften the blow(plateau, soft landing, leveling off are RE doublespeak to mask the real truth).

Sylvia wrote on Jan 7, 2006 1:03 PM: I've had enough! I'm leaving california this month. I've lived here all my life and never thought I'd see the day when a working professional could not afford a decent home. If you don't make six figures (dual incomes) in southern california forget the median price home. Homes are on average 500k in my area that is not reality! What about single folks, young people just out of college? It has to reverse or California will have a unbalanced income population. Add the underground economy caused by illegals which nobody wants to address it's a mess. California is no longer the Golden State. It is crowded, unaffordable, over taxed, and stress ridden. Take it from a native it's overrated.

Sammy wrote on Jan 7, 2006 7:41 PM:With the number of people who bought second home based on the interest only loan, I will not be supprised when the market become down. In fact, i had seen people who can bearly make the payment of interest for less then 6 months to try catch the wave, I am sure the ride will be hell of fun for them.....

Jerry wrote on Jan 12, 2006 9:06 PM:Do not worry that the housing market may decline! It will keep growing at a healthy rate until US debt is growing. The Government shall never allow it to fall, because then Chinease will come and swap the houses for the debt.

Freefallen wrote on Jan 12, 2006 11:46 PM:I live in the Santa Barbara/Ojai area. SB prices are beginning to fall. The lower priced homes have fallen about 7% less than the last highest sale. Ojai prices are coming down dramatically.....around 10% less and inventory is on the rise. No doubt we are going to see a harder fall than the so called experts are predicting. It is the mortgage and real estate brokers who are saying there will be a soft landing......come on get real folks, you've been part of the problem! I have a realtor next door to me that keeps trying to talk me into buying a home right now. I tell "I am not stupid, why catch a falling knife!" These people are into selling snake oil....in a way I don't blame them, they are trying to protect their job, but at our expense!

T wrote on Jan 16, 2006 3:58 PM:I just hope it begins to decline and rapidly It's riduclious. People can't afford to live in So. Calif and what will our children do? They could never live here and start their own families. It needs to burst, the income does not match the outgo. No matter what your job is, it's not enough to buy a home and raise a family without having to go into debt. It's a sad situation. What have we done?

Mary wrote on Jan 25, 2006 8:19 PM:I have been in the real estate business for 22 years in various states. I cannot believe that the Ca market can continue to sustain itself. Where are the teachers, policemen, nurses and all the other worker bees supposed to live? Not in Ca on their pay. I blame the lenders for inventing interest only loans. This created a false market. Most of these people would never have been able to buy otherwise. Many of those same people bought with no money down. What will happen when the rates go up? Keys will rapidly appear on the desks of the lenders. What incentive do people have to not walk away? God help us all. This may be the crash of all crashes.

John wrote on Jul 1, 2006 12:40 AM:Mary hit it right on the nail./ My wife is a teacher. I am a roof inspector 10 years in same company. 0 debt no kids no car payments but I'd have to spend 50% of net income on an average desert home? Ya right. This thing is coming down like a rock.