Monday, September 1, 2008

California Home Prices Plummet

Wanna see a bursting bubble?

The housing correction in California has been astonishing. As you ca see above, prices are down almost 50% from the peak in 2007.

The California home price correction is getting close to the bottom. I still think its too early to be buying here because interest rates keep rising. Catching a falling knife is never a smart thing to do, and prices look to be continuing to fall faster than Michael Phelps in the 200 meter freestyle.

I would wait until the Fannie/Freddie situation plays out and you see housing prices stabilizing. If we backstop the $5trillion in mortgage debt, the bond market vigilantes might take interest rates higher. California home prices should continue to fall as a result because mortgage rates will rise.

Patience is a virtue guys and gals. Knife catching can be painful!


Jeff said...

Asian markets tanked late in the day. The Nikkei dropped 300 points in the last couple hours of trading.

Currencies have been all over the place. The British pound is free falling. The Yen soared.

Somethings up kids!

Tomorrow will be interesting.

Avl Guy said...

Jeff, according to the FT, u've finally started to drive folks (individual investors) out of the stock market and away from the Wall Street pig men (see posting in the forum)

Jeff said...


Great stuff in the forum. Dow futures now negative.

The markets acter very strange in Asia overnight.

I am hearing Lehman is scrambling to get a deal done and so far they don't have an agreement.

They keep saying that they are close to a deal and Korea keeps denying it.

The fact that Lehman has been all over the news the past few weeks tells me Fuld is getting desperate, and he needs to get a deal done.

If he can't get the Korea deal done then maybe he is out of options and Lehman blows up?

We will see this week. Maybe tomorrow!