What Did We Know and When Did We Know It?

What did we know and when did we know it?

I was going through my old Blogger blog earlier today and came upon this post written almost four year ago (Feb 22, 2005). It was back when I worked in Palm Beach County Florida and referenced a study by National City Bank (now part of PNC Bank) published that month. Unfortunately, the link below will now take you to current study (3rd Quarter 2008) but it is an interesting look at housing values.

There was plenty empirical and anecdotal evidence four years ago that the market could not sustain the growth of the prior few years, but most people in the biz (and the general public) were not ready to believe.

Blog Post from February 22, 2005 below    http://tinyurl.com/c8qdhw

The Housing "Bubblette"

There's been a lot published recently about the possibility of a housing bubble that will burst and leave people with negative equity in their homes. Can it happen? Has it happened before? The answer is yes and yes. Japan has had a slow housing market for the past seven or eight years so any economy is susceptible.

The economics department of National City Corporation, a large financial institution, did a study to try to identify in the 99 largest US markets where single family home valuations are at a premium or a discount. And good old Palm Beach County per the study is 26% overvalued per the benchmarks used. All of the markets that were more overvalued were in California. Also highly overvalued in Florida were the Miami Ft Lauderdale and Sarasota markets. Big markets like Orlando, Tampa and Jacksonville were basically neutral. The most undervalued, Memphis and Salt Lake City.
You can read the entire study at http://www.nationalcity.com/economics