Chapman: Prospects Dim for Housing

Inquiring minds are scratching their collective heads trying to understand the logic Chapman University uses to conclude that there will be “modest price gains and increased homebuilding in Orange County next year.”

Now, anybody can have any prognosis they feel is right, but, it is the reasons Chapmen gives that start the scalp itching:

The number of homes for sale will be large, defaults and foreclosures will grow and consumer anxiety will be high, according to Chapman University’s 2011 economic forecast.

In addition, non-residential construction will drop and overall construction employment — already at a low point — will drop even further.

So, how do the eggheads come up with such a foolish conclusion as “price gains” next year? Well, because in real estate price is not exactly the metric it is in other markets. The reason is there are homes of all different prices. Sell more homes in expensive areas than lower priced areas…and you get a rise in prices.

The bottom line is that home prices in the OC are going down. In real terms they are going down a lot. The Alt-A foreclosure bubble that is popping now is a much higher priced home than the subprime homes of a couple of years ago.


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