More Charts to start the new month

Cruising around this evening I ran across this report on Mish global economics site. It seems I'm not the only one that gets a dozen emails a day asking when I think the bottom will be. This article and attached charts echo my feelings. Prices will settle back to around 2000 levels give ro take a year. I also don't think we will see those peak 2005/06 prices again for a very very long time.

Here's the post.

When Will Southern California Home Prices Bottom?

Inquiring minds are wondering about California home prices. My friend "BC" pinged me recently with the following thoughts:

Were the Kuznets Cycle to confirm to past patterns, real median CA house prices will not again return to the '04-'06 levels for another 15-20 yrs., if then given the longer-term demographic profile, normalized lending standards, and likely slower real GDP growth trend (2% vs. 3-3.5%).

Seen another way, nominal SoCal median house prices will not bottom until prices return to the '99-'01 levels, implying another 20-30% avg. decline in prices hereafter; but even then nominal prices will likely not rise more than inflation for many years thereafter.

By the early to mid-'10s, CA mortgagees will have made no money in real terms on their real estate purchases for ~15-30 yrs. (worse when counting home-equity loans).



Well, that's another month in the bag. That's nearly the end of the traditional selling season. There will probably still be good numbers posting for the next month or two because of the 30 to 90 day lag to takes for sales to close. So the june/July sales should be closing in August making the numbers look good. Don't forget that last August we were already well into the sales freeze due to the credit implosion and the fact the word of the bubble popping getting out to more buyers. The year over year price declines will also start to level out a bit. After all you can only go dow 40% a year for so long before homes would be practically free (like in Detriot!).