Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Friday, April 28, 2006

Speculation & Easy Money Hangover

This is what the housing market's chief cheerleader said to Florida Realtors. Read closely and then imagine what he would say to Sonoma.

'"We're in a cleansing mode right now," Lereah told about 400 people. "It's going to hurt."'

"The region's real estate economy must recover from a hangover wrought by a spasm of speculation and easy money, said David Lereah, chief economist at the National Association of Realtors, during a speech to Realtors at a West Palm Beach hotel Thursday."

'"If you have a healthy local economy, it's almost impossible to have a bubble burst," he said."

"Lereah cited Florida's strong job growth numbers. Palm Beach County and the Treasure Coast are enjoying record-low unemployment, according to state figures released last week."

(Ah- job growth... what's that Sonoma County?)

"For the near future, though, home sellers will have to contend with a glut of properties for sale and less interest from buyers."

"That reality was reflected in a report this week from the Florida Association of Realtors, which said the number of home sales in Palm Beach County in March was down 33 percent from a year ago."

"Lereah called the slowdown healthy: "Prices got a little too high. We got ahead of ourselves. We needed to catch our breath."'

'"Is this a bad year? Yes. Your numbers will be down," Lereah said."

"Lereah dismissed widespread concerns about the lack of affordable homes in Palm Beach County and the Treasure Coast. Following five years of home-price increases that far outpaced income growth, the median price for an existing home in Palm Beach County in March was $393,700."

"But, Lereah said, that number isn't so steep compared to some other parts of the country such as New York and northern New Jersey (median home price of $459,600), Bridgeport, Conn. ($468,500) and Washington ($432,900)."

Makes you wonder what he would say about Sonoma now doesn't it? Average household income of less than $50k a year, and median house prices above $600k. I bet it should sound something like this.....

Is this going to be a bad year? Yes. Most definitely. Your numbers will be down... and no, when your biggest job growth is in the service sector and paying on average of $13 per hour... you are not still affordable. You don't have a healthy economy that can sustain the prices. You have gotten WAY ahead of yourself due to easy money and speculation... there will be pain involved.


At 4/28/2006 09:44:00 AM , Anonymous tom stone said...

time for a high colonic? use barbed wire to clean those little nooks where your ears get stuck!remember cleanliness is next to godliness.

At 4/28/2006 11:48:00 AM , Blogger Athena said...

bwahahahaha! The worst part about the hangover is waking up with a bad case of the "oh NO's" Imagine the epidemic of "Oh NO's" that is coming....

At 4/28/2006 11:58:00 AM , Blogger marin_explorer said...

"The region's real estate economy must recover from a hangover wrought by a spasm of speculation and easy money...If you have a healthy local economy, it's almost impossible to have a bubble burst,"

Who else finds Lereah's backpedaling amusing? Does he now suggest that a "spasm of speculation" isn't a healthy aspect of real estate? What was he thinking last year? Just whoring for the RE industry? Let's excuse him for that.

"If you have a healthy local economy, it's almost impossible to have a bubble burst"

I wonder if Mr. Contradiction has found any local economy that would not react negatively to 100%+ home appreciation over 5 short years.

At 4/28/2006 01:59:00 PM , Blogger Athena said...

I find his backpedaling VERY amusing. Last year it wasn't speculation- it was prudent investments- because real estate is always a good investment.

healthy local economy... LOL... Places like SF, Silicon Valley and other locals that have job diversity, actual industries and high dollar wages often enjoy healthy aspects to their economies...places like sonoma? Are you kidding me? Healthy economy is a service sector industrsy and an average household income of below $50k per year? Who is the idiot that actually believes that the cost of housing is actually sustainable here? How did these people get so math dumb? I would like to hear David L's idea of what a healthy economy looks like... just for kicks.

At 4/28/2006 08:20:00 PM , Anonymous tom stone said...

now athena,don't forget our meth labs and pot gardens,and i'm sure a lot of folks will want a glass or two of wine to help their digestion.a large part of our economy must be black or gray or all those bartenders,waitresses,and hairstylists would't qualify for million dollar 100% loans,would they?

At 4/28/2006 09:33:00 PM , Blogger Athena said...

ah yes... I forgot about the invisible economy. Don't forget the gardners who double as real estate speculators too. ;-)


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