Monday, June 20, 2005

Housing: Psychology Change?

by Bill McBride on 6/20/2005 12:05:00 AM

My most recent post is up on Angry Bear - Housing: Bubble Talk.

UPDATE: I added this to my AB post: The WSJ (Greg Ip) has a front page article this morning: Booming Local Housing Markets Weigh Heavily on Overall Sector (pay): A few quotes:

New federal housing data show that the nation's most overheated local housing markets now make up such a large share of the total U.S. market that a sharp fall in their values could stall or slow national economic growth.
"It's a widespread boom and has macro implications," says Richard Brown, chief economist of the FDIC. "A slowdown would not only hurt these markets, but the U.S. as a whole."
Unlike stocks, the housing market "would be more likely flat with 10% to 20% declines in some regions, or down slightly nationally with some regions looking ugly," says Ethan Harris, chief U.S. economist at Lehman Brothers. Even local housing crashes take years to unfold, he says.

Also see WSJ: Fannie Sees Higher Odds of Regional Busts


A couple of interesting facts about the San Diego market: First, here is an interactive graph showing the number of condos in the downtown San Diego market by week. There has been a surge in listings downtown.

And the last few paragraphs in this article indicate the job market is slowing down for housing related jobs in San Diego.
Phil Blair, a co-owner of the San Diego offices of Manpower, said construction firms are gearing up for continued growth. In a survey asking local companies about their hiring activity over the next three months, construction firms were the most optimistic that they would be adding new staff.

Blair said that financial and real estate firms were among the least optimistic, with some firms planning to lay off employees.

"Usually construction and real estate go together, but not this time around," he said. "I don't know if that means that there's some sort of a lag between one industry and the other or if the real estate people are beginning to worry that a bubble has burst."

He added that with real estate purchasing and mortgage applications slowing, there is less demand for work in those industries.
Construction firms are hiring, but real estate and financing firms are cutting back. Is the bubble ending?