California's housing market is overvalued by 10 percent to 20 percent, said Mark Zandi, chief economist and co-founder of Economy.com, at a conference MondayZandi sees a soft landing as more probable then a hard landing. A hard landing for California's housing market is pretty much inevitable because it has been a speculative episode. However, Mark Zandi is correct in noting the importance of the housing market for California's economy.
Housing prices could take a sharp drop if interest rates rise quickly enough. Another possibility is that home prices would flatten "for an extended period of time," Zandi said.A flattening out of prices, connected with a gradual rise in interest rates, is the most likely scenario, Zandi said.
"I do think we will see the market correct," Zandi said.
"California's economy -- its success and failure -- is intimately tied to the housing market," Zandi said.
Wednesday, November 02, 2005
Mark Zandi On the California's Housing Market
Mark Zandi, chief economist of Economy.com laid out two possible scenarios for California's housing market. From DailyBreeze.com, November 1st:
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Most people will just stay in their homes and ride any correction out. Sure, there will be those that will have to sell at a loss because they have lost their job or need to move, but for the most part -- a home is an investment and people will do what they need to do to keep a roof over their head. I don't think that California is speculative -- maybe inland like Bakersfield or such but the coastal communities are not populated by flippers or speculators.
ReplyDeleteWould you like some more Koolaid, Nina?
ReplyDeleteMark Zandi, the pretty boy talking head who is typically rarely correct in his calls. I would always bet against him.
ReplyDeleteTo me it sounds like folks who can't afford the houses in California thinking wishfully. The prices seem rediculuous for those who can't affor them. I was told by someone who is very experienced in the housing maket and highly educated in real estate and finance that the only time prices go down is when there's a recession.... As for the higher interest rates, the only thing happening is the banks getting a bigger portion of that million dollar home... None of that savings is going to prspective buyers. California job market is growing and there is no recession on the horizon... Stop hatin' (being jealous).
ReplyDeleteRemember the Golden Rule... He who has the gold makes the rules.
None of that savings is going to prspective buyers. California job market is growing and there is no recession on the horizon...
ReplyDeleteLMFAO, how old are you? Face facts, Cali is becoming a debt-ridden, 3rd world shithole. Or is it already there?
Anyway, you're a fool to say "no recession on the horizon" as is anyone else. Only thing saving the market right now is dropping oil prices. That is it. Housing sector is a joke, CTX and a handful of others are doing well in share price but will correct. The only questions are when and how bad the damage will be. Stop drinking the kool-aid and get a clue pal.
Here we are almost two years from the first post, and prices are just starting to fall in San Francisco and other parts of California. Seems like Mark Zandi was right about a soft landing.
ReplyDeleteNow it's April 2008. It appears he was right about the hard landing also.
ReplyDeleteThe main determinants of the demand for housing are demographic. However other factors like income, price of housing, cost and availability of credit, consumer preferences, investor preferences, price of substitutes and price of complements all play a role.
ReplyDeleteEbert Alves
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