Economist: Home prices unlikely to rebound soon

“We think real estate prices will move sideways or slightly lower for several years,” said Thomas Higgins, of Los Angeles investment firm Payden & Rygel.

That’s certainly in the realm of possibility.

One barometer he follows is the ratio of median housing prices to median household income. Nationally, the figure is 4.9 times greater, and it’s a bit higher in the Valley, at 5.9. That implies more cooling off ahead so that incomes can catch up a bit to home prices.

But that’s nothing compared with the gap in certain areas of California including San Diego, where the ratio is 14 times, Los Angeles/Orange County (13.4) and Silicon Valley (11.4).

That argument isn’t very compelling, however, because Arizona real estate is now within the gravitational pull of California real estate and there’s not an icicle’s chance in hell that the ratios in California are going to 4.9.

It might be that 5.9 is a reasonable number for the Valley.

May 21, 2007 by Realtor John Wake

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John Wake

Born in Phoenix, trained as an economist and now a licensed Realtor, John uses hard data from the real estate market to help his clients -- buyers and sellers of residential real estate -- uncover their best choices for finding the right home or finding a buyer for their current home.

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