DECLINING HOUSING PRICES FORECAST.Byline: Evan Pondel Staff Writer Challenging widespread confidence in the booming Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. housing market, a UCLA UCLA University of California at Los Angeles UCLA University Center for Learning Assistance (Illinois State University) UCLA University of Carrollton, TX and Lower Addison, TX Anderson School Anderson School may refer to:
A real estate bubble or property bubble (or housing bubble could burst as early as next year just as it did in the 1990s recession. The UCLA report said a rift has formed between the true value of a home and what the same property is actually selling for in today's frenzied environment that has seen record-shattering prices month after month. Many industry experts anticipate home prices to remain high throughout the summer and discounted the danger of a crash any time soon, but the UCLA study found a serious gap in the underlying value of homes and their selling prices. ``It's like we're walking near a cliff right now on the beach, and the fog is just about to move in,'' said Edward Leamer, director of the UCLA Anderson Forecast. Leamer disputes industry beliefs that the high prices being paid for existing homes is driven by the shortage of sellers in the face of high demand. ``The bottom line is that I don't look to shortages to justify price increases,'' Leamer said. ``It's the increase in income inequality that has contributed to the problem.'' The latest figures from the Southland Regional Association of Realtors suggest a serious supply problem exists. In their May report released Monday, there were 2,952 active listings of homes and condominiums compared with 4,223 in May 2001. But Leamer argues that only about 20 percent of the state's population can actually afford many of the homes - median price $321,950 statewide - now on the market. ``We have workers who are essential to the economic well-being of the state who can hardly afford to live in decent dwellings, not to mention a pleasant little bungalow within an hour's drive of work,'' said Leamer in his forecast. And pricey Pricey Term used for an unrealistically low bid price or unrealistically high offer price. pricey Of, relating to, or being an unrealistically high offer. An offer to sell a security at $50 when the current market price is $47 is pricey. homes are abundant throughout California. The five communities and cities with the highest median home prices in the state during April 2002 were Carmel/Pebble Beach, $882,250; Pacific Palisades Palisades, cliffs along the west bank of the Hudson River, NE N.J. and SE N.Y., extending from N of Jersey City, N.J., to the vicinity of Piermont, N.Y., with a general altitude of from 350 ft to 550 ft (107–168 m). , $867,500; Malibu, $840,000; Palos Verdes Estates Palos Verdes Estates (păl`əs vûr`dēz), city (1990 pop. 13,512), Los Angeles co., S Calif.; inc. 1939. It is a residential community. , $835,000; and Burlingame, $790,000. To assess the housing market's condition, Leamer has devised a price/earnings-type ratio much like the measurement used to formulate a stock's value. The price in Leamer's ratio is the value of the home, while the earnings account for the annual rent of the same property. Much like the era of inflated stock valuations among dot-coms, Leamer said, the soaring prices of homes can't keep up with what the same dwelling would actually rent for in today's economy. For that reason, if the price of a home continues to rise, it could further the disconnect with annual rent for the same property. The result: The real estate bubble would finally cave. Just as economic indicators Economic indicators The key statistics of the economy that reveal the direction the economy is heading in; for example, the unemployment rate and the inflation rate. influence the stock market, Leamer said, interest and mortgage rates could change the landscape of the real estate market. If interest and mortgage rates rise, it would certainly impede the market's heightened pace. ``If there is a significant increase in interest rates, then you could easily see a downturn,'' Leamer said. Even so, some remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the current state of the real estate market. Despite the myriad characteristics that are reminiscent of the 1980s, stability isn't always a product of a crumbling market. ``And I don't really see things collapsing,'' said Olga Moretti, president of the Southland Regional Association of Realtors, Inc. ``I see prices stabilizing and staying even for a while. And there is, in fact, a shortage in the housing market right now.'' The region's growing population is also influencing the housing market situation. With very few affordable housing developments, demand is exceedingly high, said Jack Kyser, chief economist The Chief Economist is a single position job class having primary responsibility for the development, coordination, and production of economic and financial analysis. It is distinguished from the other economist positions by the broader scope of responsibility encompassing the for the Los Angeles County Economic Development Corp. ``Given the reality of the situation, there's no way we could meet the demand for quite some time,'' Kyser said. THE ANDERSON FORECAST Highlights of the latest economic report released Tuesday by The Anderson School at the University of California, Los Angeles UCLA comprises the College of Letters and Science (the primary undergraduate college), seven professional schools, and five professional Health Science schools. Since 2001, UCLA has enrolled over 33,000 total students, and that number is steadily rising. : Jobs Economists predict that the unemployment rate in California will rise to 6.4 percent in 2002 from 5.3 percent in 2001. The rate is expected to decline to 6.3 percent in 2003 and 6.1 percent by 2004. Unemployment in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. is forecast to remain flat at 5.6 percent in 2002 and 2003, declining to 5.5 percent in 2004. Personal income Personal income in California is expected to rise 1.2 percent in 2002, 4.9 percent in 2003 and 5.9 percent in 2004. Personal income in the United States For information on household income, see . Personal income is a measure utilized by the United States government, particularly the Department of Commerce, to determine the income of individuals. is anticipated to rise 3.7 percent in 2002, 5 percent in 2003 and 5.4 percent in 2004. Health insurance Most employers are expecting rate hikes of 10 percent to 20 percent in 2003 and are preparing for major changes in the structure of health plans. The burden of rising premiums could shift to workers. CAPTION(S): box Box: THE ANDERSON FORECAST (see text) |
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