Slowdown forecast in housing?
The doomsday prophets continue their hopeful march towards the apocalypse…
In today’s Chronicle, Kelly Zito does her best to downplay the fact that although many are predicting that the pace of appreciation and numbers of sales will be down over 2005, the fact still remains that double-digit price appreciation is still in the forecast, and that doesn’t suck.
“In their recent outlook, the California Association of Realtors said home values would increase about 10 percent across the state in 2006, down from about 16 percent in 2005. The association said Bay Area prices would probably rise between 6 and 12 percent.”
“For one, long-term mortgage interest rates have risen but still remain low by historical standards. In addition, real estate continues to be a strong investment — particularly in California, where builders estimate production of new homes is running about 40,000 below the annual total necessary to keep pace with job growth and new household formation.”
When you only look at the fine print in these articles, things don’t look so bad, now do they?
When you’re driving a Formula One car and you’re going 180 MPH, and you slow down to 160 MPH, you’re still in a Formula One car. Let’s be realistic here, folks… This is still an island with limited housing and no room for expansion… And plenty of people who are still very intent on living here and owning homes here. If you see a good deal as a buyer, don’t be fooled into thinking that you’re going to see prices drop. It just doesn’t happen.
If you’re still in doubt, go out and find one of the thousands of people who are still waiting for things to crash post-dot-com… It’s a bitter group of would-be homeowners, for sure…
Interesting analogy to Formula 1. On a related note, F1 cars in 2006 will be downgraded from the V10 to V8 engines. Most drivers haven’t complained much yet, but they definitely agree that something is missing with the new V8s.
Not sure how this analogy applies to the SF housing market in 2006. I’d say top-notch homes in SF will have steady gains, but ones that are in poor areas and/or dated structures…..will suffer.
SF Bubble at January 17th, 2006 at 9:12 am ( )But just like in SF (where Court Jester Daly forces abnormal changes to our free market), the Formula 1 drivers were forced into this engine change.
Mess with a free market and you’re guaranteed to lose.
Matt Lanning at January 17th, 2006 at 3:35 pm ( )