From the L.A. Times:
Karl E. Case, a professor at Wellesley College and co-creator of the index, said the improvements were a sign that the economic recovery was beginning to help consumers gain confidence.
“What people are seeing in the stock market, and what people are feeling, is the beginning of a real recovery,” Case said. “Now that the economy is starting to come back, I think the psychology has changed.”
But David M. Blitzer, chairman of the Index Committee at Standard & Poor’s, characterized the report as “mixed,” with 12 cities posting increases on a seasonally adjusted basis. When left unadjusted for seasonal variations, the 20-city index fell 0.4%. Economists surveyed by Bloomberg had expected the index to fall in January.
Richard Green, director of the USC Lusk Center for Real Estate, said Southern California is showing gains because it was one of the earliest markets to get hit and is rebounding before other areas.
“We fell first, we fell deeply and we didn’t overbuild the way other parts of the country did,” he said. “And if you look at the long-term horizon, the amount of housing built relative to population was less than other places, and it is still really hard to build new houses here.”
That means the chances of recovering sooner are good, he said.
Others were not as optimistic.
“If you look at the last two big real estate bubbles in the late 80s and 70s, you didn’t see the market rebound for five years,” said Christopher Thornberg, principal of Beacon Economics. “It’s amazing to me that people can look at a rebounding market after the largest bubble ever and possibly think this could be sustainable.”
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Click here for interview with Robert Shiller – he says the chances of a double-dip are about 50/50.
If you happen to be watching the NBC local news tonight on Channel 7 at 6pm, you’ll see Kelly talking about short sales, and possibly a quick clip of yours truly.
“we didn’t overbuild the way other parts of the country did,”
Someone needs to take him on a tour of the Inland Empire….
rebound = government support. take away the government intervention and yes, it’ll take 5yrs to recover.
the big question: how long does the government keep its intervention?
Well, since the government has been intervening in the real estate market for the last 75 years, and the mortgage market has now been effectively nationalized, I would say the intervention will continue throughout our lifetimes.
Recovery is relative, I don’t think they are talking full price recovery here, maybe normalization where there will be 70% organic sales as opposed to greater then 50% foreclosures and short sales,
I still think it will be a good 5-7 years before we get back close to prices at the peak in most area’s.
With this amazing research and insight by these highly paid media professionals, who needs enemies?
Hurru Hurry, step right up, see the freak show…
The 600 pound gorilla in the room is unemployment. The current unemployment rate in CA is an all-time high going back to 1976 when they first starting tracking the rate. The current rate of unemployment in CA will mean a long slow recovery for housing. Now if the rate was to decline to around 7% then I think we could bounce back much quicker. CA is definitely going in the wrong direction today. Do you really think the election of a new governor in November will fix our problems in the next 4 years “i.e. economy”? Good luck with that happening. We need new jobs more than anything, but more importantly we need new industries to create those private sector jobs going forward. We have come to a cross roads in CA in so many ways. The recovery will take 7-10 yrs. in my opinion from today’s level.
The simple fact remains that a SFR in SD county in the nicer areas is still unaffordable to most buyers. Without previous equity or financial help from family, these homes are financial anchors. Low interest rates and low down make for a highly levered lifestyle and possibly ulcers.
“we didn’t overbuild the way other parts of the country did,”
Someone needs to take him on a tour of the Inland Empire….
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Art I think you will find Green’specific opinion to be that CA may have built the wrong size houses in the wrong geographic locations but it did not overbuild in terms of aggregate starts vs. population growth.
In any event Jorent makes the point, “what is a recovery anyway? How is one defined?” Good question.
The stock market is no different than a Casino.
Nice 30 second shot on channel 7.
Those women must have majored in homely at school. Woof woof.
Nice 30 second shot on channel 7.
Those women must have majored in homely at school. Woof woof.
“What people are seeing in the stock market, and what people are feeling, is the beginning of a real recovery,”
Why are economists so ignorant about basic economic theory? All the recovery that we are seeing is debt based spending by the government. Subtract government spending from the GDP numbers and then talk to me about recovery.
The “recovery” talk is a bit premature IMHO. Recovery in my mind means “prices going up” and later “hitting prior levels”. Both these are a ways off.
Now, could we be at bottom (i.e. prices quit going down), yes. Could we be looking at recovery? Unlikely for a while
hey #8: the nicer homes in nicer areas have NEVER been affordable to “most” buyers.
“hey #8: the nicer homes in nicer areas have NEVER been affordable to “most” buyers.”
And that’s what people don’t understand.
Until the massive amount of debt to GDP is dealt with by either paying it down or defaulting no recover is possible. Stimulus induced government intervention ends = double dip.
just saw you on channel 7 (tivo’d). the dollhouse example thing they did was hilarious. I wish they had given you some decent airtime
socialism != recovery
Thanks for playing
Art Eclectic-I wouldn’t say SoCal is overbuilt, even in the Inland Empire. If so, there would be scores of empty houses all over the place, which simply isn’t the case. I’ve seen many old houses here in bad neighborhoods that I thought would never be (legally) occupied again get fixed up and flipped for significant profits.
I think the case for wrong type of home vs wrong number of homes is reasonable. As the economy eventually improves and people feel better about buying, homes that were reasonably sized and priced for real peoples’ incomes before the boom will become so again, and will see an increase in demand. Foreclosed multi-million dollar megamansions built where no sensible rich person would ever have chosen to live, OTOH, will continue to languish. Perhaps we’ll eventually see a reversal of the bubble teardowns, and developers will bulldoze usellable 5000 sq ft McMansion “estates” to put up quads of smaller homes.
Unemployment is another matter. The “next big thing” that should have launched last decade’s boom after the dotbomb never happened, because investment capital that should have gone into biotech, telecom or any number of other potential growth industries was lured off by the easy money of no-bid overseas military contracts and the construction of new homes people could buy by pretending they could afford them. There probably won’t be a real jobs recovery until investors realize that in order to make money they need to stop waiting for another war or housing boom and start developing things people can afford to buy that won’t sit around lowering the value of the following year’s production for the next 30 or 40 years.