When Will Southern California Home Prices Bottom?
Inquiring minds are wondering about California home prices. My friend "BC" pinged me recently with the following thoughts:
Were the Kuznets Cycle to confirm to past patterns, real median CA house prices will not again return to the '04-'06 levels for another 15-20 yrs., if then given the longer-term demographic profile, normalized lending standards, and likely slower real GDP growth trend (2% vs. 3-3.5%).
Seen another way, nominal SoCal median house prices will not bottom until prices return to the '99-'01 levels, implying another 20-30% avg. decline in prices hereafter; but even then nominal prices will likely not rise more than inflation for many years thereafter.
By the early to mid-'10s, CA mortgagees will have made no money in real terms on their real estate purchases for ~15-30 yrs. (worse when counting home-equity loans).
Cumulative Real Changes Of Southern California Median Home Prices
click on chart for sharper image
Real Annual Change Of Southern California Median Home Prices
click on chart for sharper image
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Posted by Michael Shedlock at 9:46 AM .... Print .... Email
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