Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Tuesday, March 21, 2006

Meanwhile in Northern California...

Jake Armstrong of the Lodi News Sentinel cooked up a mighty meaty title for a bubble story... written with the boldness of a blogger! (the rest of the story loses steam as he turns tail and heads in the opposite direction)
"Ding! Housing 'soufflé' removed from oven"

"Mix baby boomers, low mortgage and unemployment rates, innovative lending strategies, strong personal income growth and a pinch of speculation and what do you get? A housing soufflé."

"Home values in California crested in January after year-over-year increases, sparking concerns that the housing "bubble" was ready to burst."

"The inflated housing market in Lodi ... — will not burst but slowly settle, much like a soufflé that finished cooking in late 2005, said economist Sean Snaith, director of the Business Forecasting Center at University of the Pacific."

"Now that it's out of the oven, it is not rising anymore. We're seeing, at the highest peaks, some actual settling taking place," Snaith said.

""We have fewer buyers, larger inventory — It's all about price," said Theresa Williams, of Katzakian Williams Sherman Real Estate Co."
The rest of the story tiptoes around the bubble and poses that the housing market is just a normal market and things are moving along nicely and apparently people in Lodi are big fans of "creative lending" practices.

"Interest-only loans and other creative lending practices have also added to the mix, allowing individuals to access future income in new and different ways, Snaith said.

"Financial markets have created ways for people who don't have the traditional 20 percent down payment to still participate," he said."

"All the things that sort of underpin a housing market are still in place," he said.

hmmm... so much for daring to go where few reporters dare to go...


At 3/23/2006 11:06:00 AM , Anonymous Anonymous said...

Snaith is no great academic. He works for UOP for Jebus's sake. Not a well-known academic bastion. I guess the fact that soufflé’s can implode quite dramatically is lost on him. Lodi and Stockton are just like the rest of the bubble markets. IO and Neg am loans abound. Investors have bought >30% of the properties. Wages are nowhere near what they need to be to support these house prices. I guess like a soufflé the experience of the cooks determines how far the soufflé will settle. In this case the cooks have been the FED and Mortgage companies. For my two cents I wouldn’t want them serving me a burger from McD’s.


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