Bi-Coastal Housing Pain
As housing softens nationwide, the east and west coast seems to face the most difficulty . These two regions previously enjoyed spectacular price increases.
From Northern Virginia:
The pace of home construction in Loudoun County slowed dramatically last year, dropping to levels not seen in a decade, according to recently released county figures. By the end of 2006, the county had issued 3,284 residential building permits, 35 percent fewer than the year before and fewer than half the number issued at the peak of the Loudoun housing boom in 2003, according to a January report by the county's Department of Economic Development.1
From the West Coast, speculation is beginning to slow:
Flippers bailed from California's troubled housing market in 2006, according to a report today by a Southern California real estate researcher. ``There's a lot more caution in the wind when it comes to investors,'' HomeSmartReports.com President Michael Ela told Bloomberg. ``The margins are getting a little skinnier, and there aren't as many people making money in the flipping arena.''2
These are both positive signs. Real estate price growth had become unsustainable in many markets. As a result, supply has exceeded demand. Eventually, this imbalance will correct itself.
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Source:
1. Sandhya Somashekhar. Home Construction Hits 10-Year Low.
Washington Post. February 4, 2007.
http://www.washingtonpost.com/wp-dyn/content/article/2007/02/02/AR2007020202153.html
2. Frank Michael Russell. California housing slump made 2006 a bad year for flippers.
Mercury News. January 11, 2007.
http://www.mercurynews.com/mld/mercurynews/business/columnists/business_update/16438457.htm
© 2007 Michael Cale
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