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Los Angeles
Mortgage Broker
Referral Service
Are
Southern California Home Prices Overvalued? Thursday,
November 18, 2004 |
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Is Southern California an
over-valued real estate market?
Nine of the top 10 overvalued American real estate
markets are located in California according to
SmartMoney's December article, What's Next for
Home Prices.
Orange County, Ventura County, and San Diego are
estimated to be nearly 60 percent overvalued. Los
Angeles County was only 40 percent.
Does this mean that those 60 percent gains will be
lost over time?
Not at all. Real estate is simple supply and demand.
The issue becomes determining how much of the pricing
imbalance is justified.
In the early '90s Los Angeles home prices dropped
almost 30 percent when the market recorrected in
tandem with an aerospace job bust. Many people moved
from the area, and housing construction stopped.
When that bust started booming in the late 90's the
area's population had, and continued to, rapidly
expand. Combined with restrictive building policies
and high development costs, housing construction has
continued to stall.
So overvalued, undervalued, it's hard to say.
Nonetheless, real estate has without question,
historically, risen in value. And supply and demand
will always determine the price.
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click here to spoke with a Los
Angeles area mortgage broker serving
Southern California.
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