It may take the California housing market three years to recover from its downturn because homes have simply gotten too expensive for most buyers, whose salaries haven't risen nearly as fast as housing prices, an economist said.I'd be surprised if Bay Area median prices didn't drop a lot more than the 4.8% and 2.9% predicted for California the next two years.
The median price of an existing home in California will fall 4.8 percent next year and 2.9 percent the year after, Ken Rosen, chairman of the Fisher Center for Real and Urban Economics at UC Berkeley, said Monday during a presentation at the center's annual real estate and economics symposium.
That would translate into a drop of nearly $30,000 in the price of a Bay Area home in 2007, based on numbers released last week by the DataQuick real estate information service, which found that that the median price of a home in the region was $614,000 in October.
"This is not a one-year event and this is not a six-month event," Rosen said. "It's going to take three or four years for incomes to catch up to housing prices."
We are in the greatest financial bubble in the history of the world, deliberately created by Alan Greenspan to bail out the tech stock bubble. The tech stock bubble didn't end with a single-digit pullback, and neither will this one. Housing bubbles just burst slower than stock market bubbles. Be patient.