Outlooks Getting GloomierPosted on Tuesday, October 23rd, 2007 at 5:59am.
A couple weeks ago, the California Association of Realtors set this party line:
Tighter credit standards, affordability concerns, and a continued standoff between buyers and sellers will contribute to continued weakness in the market going into next year.Specifically, CAR expects a 4% decline in the statewide median price in 2008, after a 3.5% increase this year. This qualifies as optimism, we suppose: 2007 and 2008 are a wash, so 2009 is just 2006.
Monday, a more bearish assessment by Goldman Sachs suggested that homes in California are "overvalued" by as much as 40%. Money quote, via the Bloomberg story:
Prices in the state "have proven surprisingly resilient, given the severe curtailment of credit availability and rising unemployment,'' the analysts said in a note to investors. "However, we believe that a downturn is imminent.''As you scroll through various assessments of the market, like this LA Times story last week, it's increasingly common for folks to call the bottom for 2009 or so. (Psst! Remember, 2009 is just like 2006, so we're not talking about a big decline!)
Another respected Wall Street analyst, Ivy Zelman, thinks prices could keep falling till 2010 or 2011. Her money quote, again via Bloomberg:
We'd be better off if prices corrected all at once. It will get worse before it gets better.Oh Ivy, that's rich. You know as well as we do that home prices don't correct magically or "all at once," but through the slow and grudging, step-by-step, highly emotional actions of home sellers.
And let's be honest – as a group, home sellers are among the least sophisticated of all financial market participants. We're talking about regular folks who happen to own a home. The only thing they care about in selling is not selling for less than they absolutely must. That's why these things take time.
Of course, none of the commentary quoted above is specific to MB. (That's your job, readers.)
But there is this looming threat of a writers' guild strike, and resulting paralysis in the entertainment industry. Our high-flying RE market benefits from the funny money of the industry, so a stoppage there could put a real dent in activity here.
Uh-oh, was that a prediction? We promise, it's worth every penny.
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