Tuesday, March 08, 2005
HOUSING (AGAIN)
Anyone bored with my posts on housing yet? Haha.
The Economist continues to argue that there is a world wide housing bubble (paid subscription required). I always appreciate their global perspective:
My opinion is that the real estate bubble in Los Angeles will not strike quickly. Stocks can drop significantly with the click of a mouse. Property has an escrow period. First time buyers (like myself) are pretty much screwed, but if you have some existing equity to move around, you are still in the game. Changing now is premature. There will be clear signs that show that the gravy train is over and they haven't come yet. What are the possible signs? In my opinion, one sign is when other areas start to decline. L.A. won't be the first to go down. If London and Paris start to dip, start to watch. If Riverside and Ontario decline, I'd suggest half time adjustments.
The Economist continues to argue that there is a world wide housing bubble (paid subscription required). I always appreciate their global perspective:
America's ratio of prices to rents is 32% above its average level during 1975-2000. By the same gauge, property is "overvalued" by 60% or more in Britain, Australia and Spain, and by 46% in France.Sounds bad, but doesn't that also infer that it is possible to sustain property being "overvalued" by at least 60%? And if America is only at 32%, the eventual cyclical decline of housing prices might very well be a ways off.
My opinion is that the real estate bubble in Los Angeles will not strike quickly. Stocks can drop significantly with the click of a mouse. Property has an escrow period. First time buyers (like myself) are pretty much screwed, but if you have some existing equity to move around, you are still in the game. Changing now is premature. There will be clear signs that show that the gravy train is over and they haven't come yet. What are the possible signs? In my opinion, one sign is when other areas start to decline. L.A. won't be the first to go down. If London and Paris start to dip, start to watch. If Riverside and Ontario decline, I'd suggest half time adjustments.
