Thursday, April 27, 2006

‘No Bubble Here, Move On’

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A story by Will Carless, a writer for the Voice of San Diego, focuses on comments made by Robert Kleinheinz, the deputy chief economist at the California Association of Realtors. While reading it I couldn't help but think of the animated comedies South Park and The Simpsons, which both have played at the old joke of the cop proclaiming there's "nothing to see here" while blood is running in the street. Nothing to see here? Dude! Get real.

Here's an excerpt:
It was a joke not many people in the room found funny.

Smiling slyly, Robert Kleinheinz, the deputy chief economist at the California Association of Realtors, looked up from the podium and asked who in the room had heard of the University of California, Los Angeles Anderson Forecast. A slight murmur of acknowledgment rose from the collected crowd of mortgage brokers, real estate agents and industry insiders.

"Their claim to fame is that they got the 2001 recession right," Kleinheinz said, a slight sneer on his lips. "But, in 2002, 2003, 2004 and 2005, they said 'housing bubble, housing bubble, housing bubble, housing bubble.' So they got it wrong four years in a row."

Maybe it was just a bit close to the bone. But the meaning behind Kleinheinz's quip should've been clear to anyone who's been following the debate surrounding Southern California's housing market.

On one side of the debate, sit people like the Anderson team, who've been arguing all along that home prices in Southern California are ridiculously overvalued and will eventually have to come back down to normality.

On the other side of the fence, people like Kleinheinz argue that the price increases -- around 150 percent in much of the region since in the last decade -- were merely due to an historical under-supply of houses; houses were in short supply and everyone wanted to live here, that's why the price of homes has increased so much.

-- The Boy in the Big Housing Bubble/Los Angeles and Beyond