Thursday, July 31, 2008

History Bears Repeating

Here on my blog and other places I have expressed concern that the housing boom that occurred before 2006 will repeat itself. I base this on the fact that few cities are doing anything to unwind their housing supply restrictions which were the cause of the high prices to begin with. Adding to this a priori analysis, when looking at historical prices there is evidence that this was actually the second boom-bust cycle for Southern California.

Bloomberg has an article suggesting that others agree with me.

California may rebound more quickly from this decline than regions with fewer delinquencies and vacant homes, according to Zandi of Moody's The foreclosure process is ``more efficient'' than in states such as Florida where courts are involved, and Californians are typically ``more optimistic'' about housing after experiencing busts that were followed by property booms, Zandi said.

``They know it's going to be a good investment five or 10 years down the road,'' Zandi said. ``The fundamentals are good: supply constrained markets with lots of population growth, a solid and diversified economy and important global links'' in Los Angeles and San Francisco, he said.

Just beautiful.

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