Well, not exactly, but let me interpret, or clarify if you will, what she is saying. The Economy is doing great, Jobs are great, interest rates are still near all-time lows. If all conditions remain ideal, HOUSING IS STILL GOING TO DEPRECIATE 2%.
First of all, you shouldn't believe the optimism of a paid cheerleader, but more importantly, what's going to happen to housing if (and once) our perfect sailing weather turns to something other than "clear skies ahead"?
article linked here
We finish our eyeballing with Leslie Appleton-Young, vice president and chief economist for the California Association of Realtors trade group. She's a University of Pennsylvania grad, like your blogger, and she's certainly got an interesting vista of the state and local market.
Us: What's your outlook for the O.C. housing market for 2007?
Leslie: Sales statewide will be down about 24 percent in 2006 and another 7 percent in 2007. Orange County will see slightly larger declines because the run-up in sales activity was initially stronger than the state as a whole and the median home price in Orange County at $699,200 is well about the statewide median of $555,290. Affordability issues also will work to constrain sales activity in 2007. We are projecting a 2 percent decline in the statewide median price (this) year as the market continues to normalize. Orange County prices may be slightly softer because the inventory of unsold homes for sale is higher in Orange County than in many other parts of the state.
Us: How would you describe the risks for a huge price drop?
Leslie: Unlikely across the board as long as the economy continues to grow, job gains are positive, interest rates stay low and incomes increase. A huge price drop requires a much larger increase in the inventory of homes for sale than we have seen to date. If we head into a recession, all bets are off for the housing market. If growth continues at the moderate pace we saw in 2006, the correction in housing will be contained.
Us: How do you think O.C. will differ from the nation or state market?
Leslie: Because of the greater-than-average inventory of unsold homes on the market, sellers in Orange County will need to be especially motivated and realistic if they are really interested in selling in today’s market. There is a lot of competition, so only those homes that are priced to sell and are in excellent condition will sell quickly.
Us: What events might change your outlook, pro or con?
Leslie: A recession or spike in mortgage rates is the most obvious negative scenario for housing.
Us: What might be the housing surprise we'll be talking about a year from now?
Leslie: Not sure, except that there will be one!