Housing bubble leaking

Housing bubble leaking

Housing bubble leaking North County Times - North San Diego and Southwest Riverside County News

By: DAVE DOWNEY - Staff Writer

NORTH COUNTY —- The region’s swelling inventory of unsold houses, a sharp decrease in home sales and flattening prices all point to a much cooler housing market in the next few years than the red-hot one that prevailed during the first half of this decade, economists and real estate analysts say.

But where the housing market will go from here is anyone’s guess, they say.

“It’s an irrationally behaving market,” said Christopher Thornberg, senior economist for the widely quoted UCLA Anderson Forecast. “It’s very difficult to figure out where it is going to go.”

Analysts are in wide agreement that the market in San Diego and Riverside counties is caught in a so-called “housing bubble,” but they disagree on the implications.

Being in a “housing bubble” essentially means that home prices have ballooned beyond what a region’s income levels can sustain in the long run. And that, analysts say, is precisely where Southern California finds itself.

“What you’re really asking is, ‘What is an asset bubble?’ ” Thornberg said. “That is when a market price of an asset is completely out of whack with the fundamental value of an asset.”