Where is the Long Bech Real Estate market in 2007? - Part I

The $1 million question in real estate today is where is the residential market in 2007 going to finish. You could say that it is the $525,000 question which is the median price in Los Angeles county. The article we are discussing today is good and I think deserves a two part blog so this is going to be part 1 of 2.

A great article entitled "Market experts tell the real story" in the Press Telegram by Don Jergler which can be found at http://www.presstelegram.com/outlook/ci_5290043 tells a side of what will come in Long Beach.

First, the good news is that more jobs were added in the southern california area. In fact there were 63,400 new jobs added last year. I would like to believe that because jobs are being added that we will continue to have demand for housing. It just means what kind of demand. We will have purchase or rental demand. The article makes it appear that this number will hold it all together. I am not sure about that. What I know is that having jobs never hurt.

Now we get into the core of the article where they talk to some real estate experts locally. Now our goal is always to make sure to get to the heart of issues and to make sure to let you know what is going on. I believe some of the individuals quoted in the article do and others are just talking about the numbers their company is doing which I don't think benefits Long Beach home owners in understanding where the market is going. So here we go.

The first expert quoted is Bruce Mulhearn. So ignore ignore the commercial that is done by Bruce Mulhearn. He only bothers to tout his companies numbers which of course does nothing to tell readers what is going on. No offense to Bruce but home owners in Long Beach don't care if your company did $133 million in a month or $150 million in a month. That just means he made a huge chunk of change.

What does this mean for you? The market did appreciate in 2006 which is great news for all local home owners. Condos and are still going to be in demand because they exist far below the median price.

The rest of Bruce Hulhearn's points such as the demand for luxury homes has of 6 homes has just about nothing to do with the overall market as a whole. 6 homes and the demand for those is no indication on where the market is headed considering homes over 1 million are a fraction of the overall market.

At the end Bruce is predicting that appreciation will be at 6 to 8 percent a year. So let's look at this. We have had record appreciation year over year at over 20% and now Bruce thinks that we are going to go at 6 to 8%. I don't really believe this is feasible. This would mean that homes would continue to outpace the growth of wages and destroying inflation. If homes continue at Bruce's rate we will only increase the affordability problem that we currently have here in California which is that less than 24% of the population can afford to purchase. This is of course based on a 30year fixed mortgage.

So that is the conclusion of Part I. Look for part II to follow-up shortly.

As usual, you decide the truth!

You be the judge of the real estate market!