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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (15308)	11/9/2004 10:30:24 PM
From: CalculatedRisk	Read Replies (3) \| Respond to of 116555

High-end housing prices may cool down Study predicts O.C. homes priced above $600,000 could see a drop. MY COMMENT: My contacts say housing continues to be really slow in OC. By HANG NGUYEN The Orange County Register ocregister.com The Orange County housing cooldown that began suddenly this summer may extend into next year, says a new real estate report. A study released Monday by Christopher Cagan, director of research and analytics at First American Real Estate Solutions, predicts that the higher a home's price tag, the harder the slowdown will hit. Prices of Orange County residences valued above $600,000 may stay the same or go down as much as 5 percent by a year from now, First American says. Prices of homes selling for less than $500,000 may stay the same or go up as much as 10 percent, according to First American. That's a sharp change from this past spring when annualized appreciation rates ran 25 percent or more in many parts of Orange County. "What has happened is a return to normal market conditions after a very long and powerful bull market," First American's Cagan said. Cagan says the key to the slowdown is a shrinking number of people who can afford to buy a home. According to California Association of Realtors measurements, the number of O.C. households that could afford to buy a home is at a 16-year low, while the supply of homes for sale is almost six times larger than a year ago. Cagan doesn't expect a dramatic drop in home prices for 2005. He predicts that a healthy economy and higher – but not extremely expensive – mortgage rates will motivate buyers.