A Santa Cruz Sentinel article claims the housing bubble...

A Santa Cruz Sentinel article claims the housing bubble theory was created by the media to play off our fears. BEA 4th Quarter GDP 1st Estimate 0.7% Q&A: Why Did GDPNow Rise After Durable Goods? When are Construction Revisions Coming? Nationally, the media plays on consumers' fears in order to keep the attention of listeners and readers. The real-estate housing-bubble theory has given the media a topic that excites. Renters are excited about a possible bursting of the bubble in a sort of perverse way in that they do not feel sorry for homeowners, and they see a radical drop in prices as an opportunity to get into a home themselves. Homeowners are excited because they fear they may lose some of their wealth. Unemployment is low and job growth is strong. The majority of those that buy homes in Santa Cruz work in the Bay Area, where there are jobs that pay well. The reason that Santa Cruz pops up as one of the least affordable areas in the country is because those statistics are based on what jobs pay here versus what homes cost here. In reality, homes are more expensive in Marin, San Francisco, San Mateo, Carmel, Santa Barbara and other coastal areas in southern California than they are here. When it comes to coastal California, it is hard to beat Santa Cruz for weather, being environmentally friendly and a relative lack of congestion when compared to these other areas. To top it off the leading edge of the baby boomer generation will be turning 60 next year. They will be retiring, they will be cashing in on equity to buy a second home or an investment home and they will be tapping equity to provide funds for their kids to buy homes. Peter Boutell is a mortgage consultant with a local mortgage company. Send questions to 'Lending A Hand,' 1535 Seabright Ave., Santa Cruz, CA 95062 The percentage of households in California able to afford a median-priced home stood at 16 percent in June, a 2 percentage-point decrease compared with the same period a year ago when the Index was at 18 percent, according to a report released today by the California Association of REALTORS® (C. A.R.). The June Housing Affordability Index (HAI) was unchanged from May, when it also stood at 16 percent. Leading the Way...® in California real estate for 100 years, the California Association of REALTORS® (www. car. org) is one of the largest state trade organizations in the United States, with more than 170,000 members dedicated to the advancement of professionalism in real estate. C. A.R. is headquartered in Los Angeles. For starters it seems that Mr. Boutell is flat out wrong about Santa Cruz being more affordable than Marin and San Mateo (at least according to the latest numbers I could find). Furthermore it is more than ridiculous to suggest there will be no bubble popping in Santa Cruz simply because there are bigger bubbles elsewhere. With the Santa Cruz housing affordability index at 10% and the entire state at 16% it should be quite obvious to anyone there are housing bubbles all over California. Of course that doesn't mean the bubble can't get bigger, but given anecdotal evidence of housing slowdowns in San Diego, Washington DC, Phoenix, Boston and many other places it should be obvious that the overall bubble is popping or about to. It's only a matter of time before it hits Santa Cruz too. At any rate, there is nothing quite like a bundle of self-serving 'blame the media' nonsense for a housing slowdown is there? The content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.