After the Smoke Clears: What’s Next for the Housing Market?
According to an article by Jonathan Lansner in yesterday’s OC Register (Can fires rekindle slumping housing industry?), some analysts agree with Julie (Loss from Fire… the aftermath?) and Brian (Past Sales for Huntington Beach) concerning the possibility of the fires causing an upswing in the real estate industry. The analysts’ conclusion: Not likely.
As economist Chris Thornberg of Beacon Economics said:
“Permits are down about 100,000 per year right now and still falling. The next five years will see half a million fewer units built than the last 5 years. 1,500 rebuilds? Drop it the bucket.”
Ryan Kelly, bond trader at Spectrum Management, put it even more succinctly, and more harshly:
“Not much. Not enough burnt houses.”
Ouch! But probably true.
Note: See “Fires out, California housing still burns” by James Saft, for a dismal prediction concerning the California housing market and economy.
PHOTO COURTESY DRB62
“I fear we shall outsleep the coming morn, as much as we this night have overwatched.”
— William Shakespeare, Midsummer Night’s Dream
This is the caption that the photographer included with this photo of the recent fires. It just might apply to the current housing situation: too much attention paid to what was expected to be a never ending climb in housing prices, but now the payment for unrealistic expectations must be paid.
Julie Lance said:
I hate to say it but I kind of agree with this Ryan Kelly guy. According to the Orange County Fire Authority, 15 homes have been destroyed and 9 damaged in the Santiago fire. The displacement of 15 families (maybe 24) just doesn’t seem like it’ll have an impact on the market. To me, it’s like a raindrop in a lake.
However, 200 homes are currently being threatened by the Santiago fire. Also, we know a gargantuan amount of homes were lost in other fires in neighboring counties, so we could always see people relocating from those areas to the safe OC. Still, I don’t think we’re talking a enough to make waves.
November 1, 2007 2:29 PM
Brian said:
Hmmm, all interesting perspective. Only time will tell, but the truth is the market is already bad, how much worse can it be. I really like that picture that you chose, it is nice. I have found a lot of very scenic pictures lately due to the fires, too bad the beauty comes at the cost of something negative.
November 1, 2007 4:43 PM
Sheila said:
When you look at the numbers – no the housing market is probably not going to be directly affected. But if you look at other effects – job growth from clean up, rebuilding, etc. in neighboring counties we might see a little more “stimulation” in the economy at large. I think that this is the only way we might see some growth in the housing market from the fires.
November 1, 2007 9:22 PM
Julie Lance said:
Good point, Sheila… the fires might serve as a stimulant to the economy. Also, what about the “perceived” affect? I’m always telling people to stop talking about a recession, because if you believe it’ll happen and expect it, then we’ll all make it happen. So…. I guess if everyone believes the market is going to turn around and find a renewed confidence in real estate and start buying again, then there could be a greater affect from the fires than I originally thought.
Hmmmmm….. Nah, I’m sticking with my original thought — no (or little) affect.
November 2, 2007 12:47 PM