Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Tuesday, June 13, 2006

Extremely Overvalued... That's Us.

Official News

The PD reports: "Sonoma County ranked 37th among the 71 metropolitan areas identified as "extremely overvalued" in the first quarter. The study concluded home prices in Sonoma County were 52 percent overvalued, based on historical prices, incomes, population density and mortgage rates."

"More than a third of the homes in the United States are "extremely overvalued" and are concentrated in markets in California and Florida at the greatest risk of falling prices, according to a study issued Monday."

"Napa County was ranked 16th in the study. Home prices in Napa County were 63.5 percent overvalued in the first quarter."

"When prices do fall from overvalued levels, they typically fall by about half the overvaluation, said Richard DeKaser, chief economist at National City Corp. The correction usually takes three and a half years."

"Prices in Sonoma County have leveled as sales have dropped, compared with a year ago.
Economists projected the slowdown. But they have said prices likely would not decline significantly in Sonoma County unless the region was hit by a recession and significant job losses, which is not forecast."

"The study used the most recent sales-price data from the Office of Federal Housing Enterprise Oversight."

'"Price appreciation is slowing but it continues at a historically high rate, boosted by especially strong increases in already overvalued markets," DeKaser said. The most overvalued markets continue to have the highest price appreciation, he said."

"Homes in Naples, Fla., were deemed to be 102 percent overvalued, the economists said. Other highly overvalued markets in California included Salinas, Merced, Stockton, Santa Barbara, Madera and Riverside."

"Among other big cities, Miami was overvalued by 64 percent, Los Angeles by 61 percent, Oakland by 47 percent, San Jose by 44 percent, Nassau and Suffolk counties in New York by 44 percent, and Phoenix by 43 percent."


At 6/13/2006 09:31:00 AM , Anonymous tom stone said...

it will be very interesting to see how the differences in financing affect this the last downturn,exotic loans were about 15% of the market,now it is 70%.the demographic differences are also dramatic,as is the general economic climate of sonoma county.i expect a harder and longer fall in prices than in any downturn of the last 50 years.

At 6/13/2006 09:36:00 AM , Blogger Athena said...

Grab a chair and make yourself comfortable... the show is a little slow at the beginning, but it will get more interesting.

At 6/13/2006 09:44:00 AM , Blogger marin_explorer said...

""When prices do fall from overvalued levels, they typically fall by about half the overvaluation, said Richard DeKaser, chief economist at National City Corp. The correction usually takes three and a half years."

If the OFHEO Hpi data is any indication, corrections are longer and deeper.

At 6/13/2006 01:54:00 PM , Anonymous tom stone said...

thank you skeptic,charts like that are helpful,finally had a chance to read the article micahael coit and marketwatch contributed...i'll bet coit added that homes are taking more than a month to sell now...i'm sure he bathes at least once a month cause to worry,the article only predicts a 26% drop over 2-3 years as long as the economy stays strong...i'm sure higher gas prices won't have an effect on tourism and agriculture and really how many people work in construction or real estate related jobs?oh.

At 6/13/2006 02:12:00 PM , Blogger Athena said...

Homes are taking more than 3 months so Coit at least was sort of correct. They are taking more than a month... more than two months... and even more than three months...

At 6/26/2006 11:33:00 PM , Blogger epicuria said...

I'm trying to absorb all the material you've thrown up on your blog. Don't know where to enter to comment. Actually ask a question. I'm just a schlub with a mentally damaged brother who needs to sell his 2/1 1400 sq.ft house (sun room adds the extra space)which he bought in 1988. Its at the end of Melvin, great lot. Zillow has it at $542,621 (I love how they get down to the last dollar; what a joke). Where do you think the movement price is? Or maybe you don't take questions like this, which I can understand. The bubble awareness is pretty spooky, since what ever we can get for the pad will have to support my bro for some time.

At 6/27/2006 12:08:00 AM , Blogger epicuria said...

Glad I stumbled on you. Excellent dialogue about the stupidity of the RE scene. Ah critical thinking...something they (try to) teach over at SSU.

More specifically, 18700 Melvin, some cosmetics, paint, floors, partial bathroom upgrade, Anderson windows and sliders, etc.

Drive on by (first typed ~buy~). I can lay some vino on you for any feedback (I rent in Napa, working for a company that ships wine to consumers).

Tom Merle (no commentary, just copy and paste, probably violating copywrite laws--hope it's just fair use)
Some of my own comments can be found at:


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