It's Here

I apologize for not blogging in quite some time (since late January), but work has been very busy and this blog is more of a hobby and something that, unfortunately, comes pretty low on the list of priorities. The lack of postings have not been for want of material - the bubble is clearly starting to "hiss" all around us. Inventory around the country is at the highest levels it's been at in years (if not ever). San Diego fast approaching an all-time inventory record.

Yet even with swelling inventory prices are still staying a bit firm.... for now. The media's really started picking up on the bubble talk over the past couple of months, interest rates are poised to rise, and the market is flooded with supply. It's only a matter of time before those ARMs reset, before sellers become more motivated, before lending standards tighten up to a point where it takes a little bit more than a fictional, no-doc income to land a half million dollar loan.

The only downside of an illiquid bubble is that it takes so long to play out. But that's probably good, because I don't have the time currently to track it as closely as I like. But come this summer my schedule should lighten up a bit... until then it will probably be sporadic postings at best.

In closing I'm still confident that prices will eventually retreat significantly (25%? 35%?) between now and the end of the decade. I'm hoping it happens sooner than later, but I wouldn't be surprised if we're looking at a long, slow, and painful decline. Perhaps not a decline in absolute dollars, but if housing holds steady (or declines slightly) for several years (a la Japan), the real value decreases as inflation slowly eats away at the sluggish price. But this is how it should be - why should housing "value" double every two to three years? What constitutes that value? Just speculation and cheap, cheap money. But both of those factors are quickly dying so we should hopefully see a return to normalcy that doesn't undercut or do any more damage to the economy of peoples' livelihoods than is needed to right this ship.