I attended the sold out Kern County Economic Summit today. The highlight of the annual event is the presentation made by Dr. Abbas P. Grammy.
Dr. Grammy is forecasting 2007 Kern County median home prices to rise by 2.5%. We will hold his feet to the fire on this one. Dr. Grammy is a distinguished professor and economist, however, he is already wrong on this prediction as Kern County prices have already dropped year-over-year by 2%.
Maybe he is expecting a late rally this year? I am guessing he has not factored in the massive credit tightening, inventory tsunami flooding the local MLS or the significant increase in foreclosures and NOD's?
Also, our median HH income (adjusted for inflation) is the same as it was in 2001, according to his graphs, $38,600. However, our median price has gone from $93,400 in 2001 to $275,700 in 2006. Clearly, this rapid increase in prices was not built on fundamentals, as the fundamental driver of home prices is HH income. This increase was built on cheap and easy credit and fueled by massive speculation.