Los Angeles
Real
Estate Agent & Agency Referral Service
The Southern California real
estate bubble
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 restictive 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.
Click
here for the complete LA Times Article |
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