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Sunday, November 18, 2007

Inland Empire Housing: Then and Now

by Calculated Risk on 11/18/2007 01:47:00 AM

A flashback to July 2006: Husing: Soft Landing for Inland Empire Housing

There's just too strong an economy and too much job growth for much other than the "soft landing'' Husing and other economists have been predicting for the end of the five-year housing boom.

"We are right on the cusp of a very powerful period in job growth,'' Husing said. "Local [Inland Empire, San Bernardino/Riverside area] unemployment in May was 4.2 percent, and that's the lowest I have seen for May in 42 years of studying the local economy.
Senior economist Christopher Thornberg of UCLA's Anderson School of Management had called the soft-landing theory "nonsense'' on Tuesday and said we are in a "classic bubble.''

"If we are lucky, prices will go flat,'' he said, suggesting that we could see five years without price appreciation.

That may be true elsewhere, Husing said, but it won't happen here.

"Is the housing market vulnerable?'' he asked. "Yes, it is. But is a bubble likely to happen? No, it is not. The underlying strength of our economy is too great.''
Of course I disagreed with Dr. Husing.

Fast forward to today, from DataQuick: California October 2007 Home Sales
Price declines are severe in areas that absorbed spillover activity during the frenzy like the Central Valley and Riverside County [part of Inland Empire]. Prices in core metro areas are are off by a few percent.
emphasis added
Prices in Riverside are off 15% year over year according to DataQuick. Ouch! So much for low unemployment and a strong underlying economy saving the Inland Empire from a housing bust.

I can't tell you how many times I've heard "It won't happen here."