A story on Bloomberg.com quotes analysts who believe home prices will soon fall in the most-expensive areas of California and New York:
“Home values in America’s ritziest areas may decline by as much as 11 percent in the next 3 1/2 years, said Mark Zandi, co-founder of Moody’s Economy.com, an economic forecasting agency and unit of Moody’s Corp. in New York. The last time these markets fell was a dozen years ago when the Federal Reserve raised interest rates seven times in 11 months.”
The combination of credit restrictions, the high rates on “jumbo” mortgages (over $417,000), and the rising inventory of homes for sale will assert downward pressure on prices, the experts say.
Until now, higher-end homes (which means much of the inventory west of downtown L.A.) have been immune from the mortgage crisis, which has been most hurtful to those who could barely afford home ownership in the first place. But that is expected to change.
“‘No place will be immune,’ said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California in Berkeley. ‘Inventory is increasing and the demand side is falling off. The psychology has become negative.’”