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.