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Long Beach, Ca. Finally, an honest Economist

By
Real Estate Broker/Owner with Prudential California Realty/Gem Mortgage

Long Beach, Ca.  Finally, Dave Avery, an honest real estate economist and head of the Los Angeles Economic Development Commission,  discusses the State of Southern California Real Estate.  Mr. Avery, recently gave an address on the way things are moving at the Income Property Lending Conference  in Long Beach, California.  In regard to the housing market, Mr. Avery was the first economist that I have ever heard talking about a housing "Depression."

This was refreshing since no other economist, to my knowledge, in a public forum has had the guts and fortitude to call a spade a spade, address the problem, offer some solutions, and get on with it.  Mr. Avery detailed the current housing situation, and addressed the question, "How much further will prices fall?"

 Between 15-20% more was his answer. Considering that since February of 2007 until April of 2008 the medium sales price in the five Counties in Southern California, including:  Ventura, Los Angeles, Orange, San Bernardino, and Riverside has fallen from $505,000.00 to $375,000.00, it appears that an additional slide will be a boon for people interested in purchasing real estate. 

 Now, if Mr. Avery is right and the average property in Southern California goes down to between $300,000.00 and $320,000.00, it will be a great buying opportunity that only seems to come along every 15-30 years. 

 Consider this, that while food prices in the last year have gone up between 30% and 40%, and gasoline prices have gone up by almost 100%, that real estate is going down 20-25%. This is an amazing figure when you consider that this percentage in reduction does not include regular inflation.  Remember that the government figures of 4% does is not a real number in that it does not take into account the aforementioned prices of gas and food stuffs.  The truth of the matter is that the true inflation rate when these are included is between 10-15% a year.  Add this inflation number to the current correction in housing prices and true prices are really off between 25% and 40% depending on what market you're in.  

 Also consider the fact that current interest rates for thirty year fixed rate mortgages are between 5.5%-6% and you get housing at the most affordable price in years.

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