Monday, January 16, 2006

25 Years of Appreciation in California

(Click on the graph for a larger view.)

Check out this graph. I found it here. It shows housing price appreciation over the last 25 years. I ask you, what better picture of the California housing bubble than this? And realtors actually expect us to believe that those curves will level out rising at the rate of inflation into the future. Ha!

11 Comments:

Blogger marin_explorer said...

That pretty much illustrates the problem. I'm reminded how we thought prices were too high at the peak of the dot-com boom; noboby imagined it would keep going on like this!

See how that smaller peak in 1990 corrected into the late '90s? What's in store after this boom?

Jan 17, 2006, 9:46:00 AM  
Blogger Marinite said...

What's in store after this boom?

Oh, well, of course we are in for a "soft landing". That means price appreciation will moderate to YoY of about 5-6% and so trend slightly upward of that of inflation. What happened in history is irrelevant..."it's different this time".

(Disclaimer: The above is pure sarcasm and disgust and should be so interpreted.)

Jan 17, 2006, 9:48:00 AM  
Blogger marin_explorer said...

Out of curiosity, how do Marin prices compare to the SF trend on that chart?

Jan 17, 2006, 1:20:00 PM  
Anonymous rejunkie said...

Marinite-

Love the stats BUT you should put format this as a logarithmic chart, rather than a linear one since a steady 5% year over year appreciation would still appear to curve up on this kind chart but remain straight on a log chart, which is more suited for showing deviations from trends. Actually by using a log chart, I think the early 90s drop would be even more pronounced.

Jan 17, 2006, 8:22:00 PM  
Anonymous by_palladium said...

Too bad sac is not on there....it seems that it might be the winner.

One deceptive aspect of this graph is that it really doesn't show that 25 years ago, Bay Area/LA realestate was still very expensive relative to prices in the rest of the country. So, compared to houses in seattle or Des Moines, we have a bubble on top of an already high starting point.

But as we all know, the Bay Area/Marin just keep getting better every year...(sarcasm disclaimer)

Jan 18, 2006, 8:25:00 AM  
Blogger Marinite said...

One deceptive aspect of this graph is that it really doesn't show that 25 years ago, Bay Area/LA realestate was still very expensive relative to prices in the rest of the country.

Go to the link I posted and you can see data for other areas. Yes, thanks to all the regulations and environmental laws, etc., California is more expensive than other areas because it costs so much more to build. But the bubble's effects are on top of whatever the prices were before. It's addative. A pedestal effect.

Jan 18, 2006, 8:51:00 AM  
Anonymous rejunkie said...

DQNews statistics for December are confirming everyone's gut feeling on this topic:
http://www.dqnews.com/RRBay0106.shtm

The article describes much slower sales and a drop in median values from November.

Marin appreciation is now firmly in the single digits -- up only 5.3% from December 2004, the second slowest in the 9 county region. November 2004 to November 2005 was 9.5%. I think even a dead cat bounce is unlikely at this point.

Jan 19, 2006, 1:00:00 PM  
Anonymous rejunkie said...

BTW, affordability in Marin is holding steady at 12% between October and November:
http://www.car.org/index.php?id=MzU4NDc=

Sonoma, Santa Barbara and San Luis Obispo still leading the race to the bottom on affordability at 7%, so 70% more people in Marin can afford the median Marin home than in the respective residents in those counties.

Is there a SonomaRealEstateBubble blog and corresponding SonomaPOS blog?

Jan 19, 2006, 1:06:00 PM  
Blogger Marinite said...

DQNews statistics for December are confirming everyone's gut feeling on this topic:
http://www.dqnews.com/RRBay0106.shtm


I was going to blog that article but since it just reiterates what I have already posted I decided to save everyone's time and not post it; that and the fact that I am busy with real life :( . I guess it just validates the analysis found here. Seems to me there is not much left to do but watch events reveal themselves.

Is there a SonomaRealEstateBubble blog and corresponding SonomaPOS blog?

Funny. Some folks have asked me to cover Sonoma/Napa. It makes sense that the areas further out from SFO are getting hit earlier and harder. It will be "fun" watching the decline spread inward.

Jan 19, 2006, 1:57:00 PM  
Blogger marin_explorer said...

Here's a recent article on Sonoma real estate.

Jan 19, 2006, 2:51:00 PM  
Blogger sf jack said...

In the link reskeptic provided:

"'With the activity that I see from buyers, when the spring inventory hits, I think we're going to have a good, strong year. We will see,' said Rick Laws, Santa Rosa manager for Coldwell Banker."

*********

"When the spring inventory hits..."?

Affordability at 7% in Sonoma County and he's talking about "buyer activity"?

We will see, Mr. Laws...

Jan 19, 2006, 6:33:00 PM  

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