happens to the number of new homes being built?
We’re currently in research mode for our upcoming California market timing report in February. We do this event every few years and have since our first report in 1997. The name of that report was The California Comeback: Why Prices Will Double in the Next Eight Years . We wrote another report in late 2005 entitled, The California Crash: Why Foreclosures Will Explode and Prices Crash . So, in February, we’ll take our best shot at saying what’s next. Forecasting the 2006 Housing Crash Just like in late 2005, most everyone involved is sitting on a pile of equity. In late 2001 and again in 2006, John Burns invited me to debate the topic of the possibility of California having a price crash. The audience was made up of all California builders. Imagine telling a builder in 2006 to sell every lot, land project and house immediately to avoid a huge loss. That was a tough sale in 2006 because every indication was a rosy outcome for the housing industry. I love when people tell me they saw the crash coming, too! “Gosh, I’m so glad to hear that. Can I see a copy of what you wrote at the time?” Crickets! So, was it really that easy to see it coming? Let me share some charts with you after I ask you to take a little test.
A few questions before you look at the charts. How sure are you of your answers?
3. As affordability declines (less people can afford to buy), what happens to the number of foreclosures that occur?
Would you be able to look at these charts and get out of harm’s way in 2006?
CALIFORNIA AFFORDABILITY VS SALES
Source: California Association of Realtors
CALIFORNIA AFFORDABILITY VS NEW HOME CONSTRUCTION
California Housing Units Built
1. As affordability declines (less people can afford to buy), what happens to the volume of sales?
2. As affordability declines (less people can afford to buy), what
Source: California Association of Realtors and the Real Estate Research Council
ATTOM Data Solutions • P14
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