Thursday, June 22, 2006

LA Times: Slowdown could "settle in for a stay" - buyer says he doesn't want "to be the one to overpay"

Southern California bubble watcher Annette Haddad at the LA Times reports in a June 21 story that the home sales slowdown could linger for a while. However, economic and market forecasters, as well as the media, still won't even entertain the idea that a "slowdown" could slip into a "crash", or that it could aggravate the possibility of a severe recession.

The median home price in Southern California in May was only up 6.4% YOY, which is the smallest YOY gain since July 2000. Notice in the article that home prices are still viewed in terms of gains, as in, "how much or how little", not whether home values can actually decline. It'll be interesting to see what the mood is a year from now.

Even the UCLA Anderson School of Business is forecasting "slower growth" for the regional economy, but not a recession.

Realtors say that speculators have vanished, which has taken the edge off the market and caused demand to shrink. They view the market as "more normalized".

Orange County posted the biggest YOY decline in May sales, 31.6%.

2 Comments:

Blogger LARenter said...

I look at these articles out of the MSM as a barometer more than I do a source of info. IMO the people who see a bubble in RE generally have one thing in common, they have done due diligence and have a good handle on concepts that are taught in Econ 101. Plus they did not get swept up into the irrational emotions of market momentum. Given the transparency of RE this has been an easy call. What has been interesting is to see how the MSM works. It has been illuminating exactly how uncritical and lazy they are. More so during the height of the boom than now when it is so painfully obvious what’s happening. The reason that I say this is because personally I am not a rocket scientist. So if I can figure this out surely they can.

So during the boom they were primarily singing with the chorus, now the context of the articles and reports coming from the media accept the assumption of a slow down but they all make quotes this won't cause a recession. And anybody with an ounce of common sense knows this to be false. You can't have an entire economy where 40% of the jobs created were RE related, and then have a sharp downturn in that sector and not have it impact the general economy. What bothers me is that they don't present this side in their reporting. They stick to the party line home prices don't fall and this will be a soft landing. And that is a disservice to the public.

8:18 AM, June 23, 2006  
Blogger bearmaster said...

I entirely agree with you, the newspaper articles are useful for giving some numbers. But in terms of getting information out of them that helps somebody be proactive, forget it. Newspapers tell the crowd what they want to hear at the moment. And right now that means placating the crowd with assurances that things will be OK over time. My own philosophy is, by the time the bad news hits the front page of the newspaper, it's too late to fix the problem.

And you don't have to be a rocket to be able to see that! ;) Heck, if Isaac Newton got caught in the South Sea Bubble then any brainy type can get caught in a bubble.

8:48 AM, June 23, 2006  

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