California Train Wreck

According to Bob Chapman's International Forecaster Train Wreck of the Week (December 27, 2005),

Even though new homes are selling well new home inventories are the highest in history. It now takes twice as long to sell a house in California as it did a year ago and in Orange County, the sale inventory is five times what it was a year ago.

and...

Seventy-two percent of homebuyers in California over the past two years are spending 40% of their total income on debt service. That is ominous when California real estate is over valued by 45%.

Personally I think that some California real estate is overvalued by far more than that. And while things feel a bit slower in my neck of the woods, there aren't hard signs of trend turnaround ... yet. I remember the early 1990's, and the forest of "For Sale" signs I saw in some neighborhoods. We're not back there - not yet.