California, U.S. in a Housing 'Bubble,' UCLA Forecast Says
Economists at UCLA have invoked the B-word again. In an outlook to be formally released today, forecasters say California and the nation are beset by a housing "bubble" that will depress construction next year, slowing the nation's economic recovery.Yet the fallout from the bubble in California won't be devastating, according to the UCLA Anderson Forecast. Indeed, the Golden State's economy will expand at a faster clip than the nation's in 2005, thanks in part to a recovering Bay Area, the widely watched forecast says. ..
Outside of California, overbuilding is viewed as the main problem by UCLA. One telling statistic: The nation has added one new residential unit for every adult added to the population over the last two years. The historical average is one unit for every 1.7 new adults.The bottom line: Today's pace of construction can't be sustained, Leamer said. Housing starts nationwide are expected to slow to 1.8 million units next year from 1.94 million this year.
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I wouldn't mind a slowdown in new housing construction. I think there is a lot of over-building going on, concentrated in "hot" areas that in a few years will be practically unliveable. The traffic congestion on feeder roads will cost you two hours just to get from home to the expressway. The schools will be over-capacity with kids in trailers, and the voter/taxpayers will refuse to pay more. And sooner or later--especially in California--people will say "no thanks" to mediocre tract homes with HOAs, located in the middle of nowhere, that cost $500,000. That's the cure for "sprawl." Not a dictatorial regional planning board, a la Portland. Failure of demand. Works every time.