Friday, October 20, 2006

The Future of California Home Prices

Home Prices

United Kingdom As shown in Exhibit 4, U.K. home prices have accelerated to an unprecedented 20% annual price appreciation over the last 3 years from 8% annual appreciation over the last 20 years.

Likewise, California home prices have followed a similar trend, increasing 15% per year over the last three years versus 7% annual appreciation over the last two decades.Exhibit 3 and Exhibit 4 compare the existing home price indices of California and the U.K. market. On a quarterly basis, prices have a surprising correlation at 99% since the beginning of our data series in 1983.

As you can see above the UK and California have a 99% correlation in home price appreciation over the last 23 years with the UK leading 12-15 months. If you want to see the future of home prices in California, just look to our friends over the pond. The UK market has rebounded the latter half 2006 with appreciation in markets from 6-10% (see post from October 12th).

The future of CA in 2007/8 bodes well

Source Credit Suisse First Boston Sept 13, 2005


sippn said...

I appreciate your information but the charts are at least 12-18 months old and in need of updating.

JR said...

UK house price inflation easing

“A survey from housing information business, released earlier this week, showed that the proportion of postcode districts that had witnessed an increase in prices had fallen sharply from 29.8 per cent in September to 24.6 per cent this month.”

“What are they doing right over there that our economic leaders are missing?”

Well, when they were having their tiny dip a few years ago, they solved it by massive immigration(at least 600.000, probably much more than a million) from Poland and other new member states of Europe. All those people have to sleep somewhere. Even with several in one appartment, that makes a lot of housing and pressure on housing in the few dense hotspots.
But the party seems over. Because massive immigration puts also high pressure on social security, the Blair government is not planning to do the same trick with the Roumanians and the Bulgarians who will become European citizens the 1st of January 2007. The government already declared that they will not be able to come to live in the UK.
I think it’s GAME OVER …soon.