Posted on: Friday, December 24, 2004
California housing prices soar
By Mary Umberger
Chicago Tribune
CHICAGO — You know that sound you get when you tilt a shoebox full of marbles?
That's sort of what's going on in California, where housing prices are so insane that fully one-quarter of the population says it's thinking about relocating to another area, even to another state.
That's according to a nonpartisan think tank in San Francisco, which says that its recent survey of Californians' attitudes about housing is the most comprehensive of its kind in years.
The Public Policy Institute of California also says that within the numbers of potential housing refugees lies an even more worrisome nugget:
About half of those younger than 35 — the state's prime labor force — say they're giving thought to moving on to greener pastures.
Apparently they're not the first Californians to get the idea to clear out. Last summer, U-Haul International suspended most truck and trailer rentals for one-way moves out of California between Aug. 2 and Sept. 7 because its equipment was crossing state lines and few newcomers were bringing in replacements; the ban was still in place in some cities in November.
In California, the median single-family price was a twitch-inducing $465,000, according to the California Association of Realtors, which estimated that just 19 percent of the state's population could afford to buy that house.
A bubble occurs when home prices get pumped up so much that buyers just back away, leaving sellers with no choice but to cut, cut, cut their prices, even to the point where they might lose money.
Here's one recent, typical opinion, that of Cambridge, Mass., housing analyst David Stiff, who tracks home-price appreciation around the country for Fiserv CSW. Recently he said:
"I've been reluctant to label any market as a bubble, but in Southern California, in only the past 12 months, prices have gone up 31 percent. Given how expensive those markets are, I'd characterize it as a bubble.
"People are being irrational about how much they're able to pay."
