Thursday, February 16, 2006

Real Estate Market Cooling Or Popping?

Check out the lede and the the first few paragraphs from the LA Times on the bursting of the Southern California real estate market:

Six months of gains in Southern California's median home price were wiped out in January while sales activity dropped sharply, further signs that the region's once-hot real estate market continues to lose steam.

The statistics, released Wednesday by DataQuick Information Systems, a La Jolla-based real estate research firm, suggest that the market is making a "soft landing" of flattening prices and fewer sales after sizzling gains during the six-year boom, analysts said.

Many homeowners, who were quick to put their homes up for sale a few months ago in hopes of scoring swift and easy profits, are seeing more price resistance now. Buyers are taking more time to shop around, and are making more-modest offers.

"We're starting to sense a shift from a strong sellers' market to more of an equilibrium," said Rich Roberts, vice president of marketing for ZipRealty Inc., a national brokerage based in Emeryville, Calif.

"But it's a slow-moving transition, which is good," he added. "We're not seeing a bubble bursting."
Now I know the people in the real estate business are desperate to get people to believe there is no real estate bubble. Real estate agents, brokers and others continuously repeat the meme that the real estate market is having a "soft landing" as the market shifts from a "seller's market" to a "buyers market."

But let's think about the people who bought houses in the Southern California market during the last six months.

These people have seen prices for houses drop and may now be the proud owners of houses that are worth less than what they paid for them.

That may not be a bubble bursting, but it sure doesn't sound like a "soft landing" for those people either.

But as long as people in the real estate business just keep repeating the phrase "soft landing" over and over, everything will be all right, you know?

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