because it doesn’t seem to make sense. How can you have more homes sell and more new homes built as people can afford less? The main reason I have come up with is, as long as there is affordability left in a given cycle, prices will continue to increase. Why? Human participants are on all sides of the transaction. If lending policies allow, we all continue to buy and everything real estate does better until it hits a wall. You cannot tell you are coming to an end of a cycle by how you “feel.” Nearly everyone felt exuberant in 2006 including expert builder and consumer alike. It didn’t stop a crash from occurring. As we look at the past few years, as affordability declined, virtually nothing happened to sales volume and there was very little improvement in single home construction. This is not normal. There are few things that are working together that are creating a downward draft. 1. Lending policies are still too restrictive. 2. Some still have a bad “feeling” about owning a home due to past loses. 3. We have a group highly educated young adults who have accumulated a lot of college debt and many are still under- employed. 4. Our young adults are waiting to get married and start a family. I think 2017 will be a decent year for real estate; sort of mimicking 2016. My main concern is what happens after that. What’s holding us back?

Total Trustees Deeds Recorded


Source: California Association of Realtors and the Real Estate Research Council


California Unemployment


Source: California Association of Realtors and the Real Estate Research Council

3. Volume of foreclosed properties declined steadily as affordability went down

In every cycle, from the mid to late 1970s to 2006, what happened as affordability went down?

1. Volume of sales soared as affordability went down

4. Unemployment improved as affordability went down

2. Volume of new homes being built soared as affordability went down

So, how did you do? Most people get a zero on the test

ATTOM Data Solutions • P15

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