On Wednesday the front page of the Mercury News business section featured an article that sparked some hope about California real estate. The article focuses on the research of economist Ryan Ratcliff, who is confident that although the market still has room to fall, it will soon find equilibrium.
A handy chart based on Ratcliff's research from the UCLA Anderson Forecast illustrates the phases of CA's real estate bust. Here's a re-cap--
Phase 1--When home sales plummeted in 2005 and new home builders began to cut prices and offer incentives
Phase 2--When foreclosures stormed the market in 2007
Phase 3--(We aren't here yet!) It will supposedly happen when prices are still weak but sales increase
Ratcliff estimates we're currently somewhere between stages 2 and 3.
So is the worst almost over?
Economic studies say that bargain hunters taking advantage of lower prices in areas slammed with foreclosures are helping halt the market's free fall. Although foreclosure problems are by no means disappearing, higher volumes of sales in areas like Centra Costa and Solano counties are good signs that things are starting to balance out.
The article bears the tentative title Signs of Life for Real Estate?, and it stresses that we not take the market's long-awaited stirrings as proof that a normal housing market is on its way.
Still, economists predict foreclosures caused by resetting adjustable rate mortgages could have already reached the top of the mountain, and might slowly start to decline by 2009.
In the paper, the article is called Signs of Life for Real Estate? It's written by Sue McAllister. I tried to find the same article in the online version of Mercury News. The link leads the same article, strangely with a different title.
Click the title to read it!
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