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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (43638)	10/25/2005 5:22:12 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

I'm not making any kind of predictions about where prices will go in the near future, just about what has driven them over the last 25 years. There has been a consistent gap between the population growth/ household formation and new housing units. There would have to be a significant change in local policies in regards to allowing higher density housing or a large exodus of population to eliminate this gap in CA. New housing supply only seems to break through the local barriers to building when prices have had a sustained rise like we've seen in the last few years. The same thing happens in my area which also has serious anti-growth policies. When prices were normal nobody found it worthwhile to jump through the hurdles to get a project through. At higher prices they all go through. You have to remember that the homies aren't necessarily in the biz of building houses as much as they are in the business of banking land at low prices and selling it later for a higher price. It took them 10-15 years of holding (around here) to profit from the land options they acquired back in the early 1990s but they got very decent returns, far better than they would have gotten if they had tried to build houses on their land back when the prices they could charge for them were still "reasonable". These restrictive policies that drive up land prices ahead of inflation work decidedly in their favor over time.

To: mishedlo who wrote (43638)	10/28/2005 2:08:07 AM
From: David Jones	Read Replies (1) \| Respond to of 306849

>>>>I do not care what the population growth is in California. Prices simply can not forever rise above people's ability to afford them<<<<< It about roofs. Not if one can afford one, because miraculously most everyone here can afford a roof over their head. Someone can and is purchasing roofs for the population. So they end up with a crappy return on their investment and their renters reap the windfall. Oh well. I agree there's going to be a shake out and prices should come down. But no one has adequately addressed the numbers of speculators/investors skewing the numbers nor how such a shake out will play out. When I see truly massive condo villages going up and California government harping on the need for affordable housing well I just smile. Because I'm not sure we haven't addressed that problem. As I pointed out here on the thread a few thousand posts ago Section 8's renting large homes with pools is not the norm.