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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Wyätt Gwyön who wrote (43760)10/27/2005 11:38:07 PM
From: GraceZRead Replies (1) of 306849
 
so there is a lot of property withheld from the market, and this puts upward pressure on prices.


Take this thread backwards to it's beginning because this is the myth I've already disproven by showing that CA has a higher turnover ratio for existing housing than the country as a whole (6.5 as opposed to 5 in the last 3 years), not a lower one as everyone keeps insisting. In fact the North East has a turnover rate almost half the CA rate. People hang onto their low basis houses for the same reasons there but it has no where near the same effect on price until you get to areas where new construction is severely limited, like CA.

Price is a wonderful indicator. CA has had a structural deficit every year in unit growth in new housing for the past 25 years (as measured as a gap between new household formation and building new units). CA leads the nation in existing housing sales most years both in unit sales and turnover ratio. You could argue that it might be even higher without the tax treatment, but that would mean that the musical chairs would have blasted past the generally recognised bubble turnover ratio of 5% a year. For a comparison, it took Japan 5 years of it's bubble to turnover 5% of the housing stock, the last five before it peaked. Lately the US has been doing that in a year. CA has had a turnover ratio of 6.5% since 1999 for single family homes.
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