1) Builder reality check:
Before we review the rosy BS forecast from the California Building group (aka building spin machine), lets look back at their 2007 forecast which turned out to be nothing but hot air :
The new home market will slowly return to what the CBIA says are historically normal levels.CBIA Chief Economist Alan Nevin forecasts that housing starts for single-family homes, condominiums, and apartments should total between 155,000 and 170,000 this year, about the same or slightly lower than in 2006.
He says it will be a “perfectly tolerable year” for builders.
That’s well short of the 220,000 new housing units the state says are needed to meet population growth, according to the CBIA.“I see a nice stable market, certainly not anything like the craziness of 2005,” Mr. Nevin says of the Central Valley north of Bakersfield.“But the market is growing. I look at places like Modesto and Merced and I see a stable growth there because the employment base is growing,” he says. “So you’ll see a nice steady type of market in the northern Central Valley.”
Do I need to go back and look at what really happened? Do we need 250 links to prove how wrong this was? Why does the media take this mind numbing drivel as anything except the load of crap that it is!
Now we get to this years forecast:
2) 2008 Predictions (hat tip Lander):
“By mid-2008 the housing industry will show signs of growth,” says Mr. Nevin. “Continued population growth, a reduction of existing inventory and a return to normalcy in the credit markets are a recipe for a more positive 2008. As a result, we are projecting a slight increase in new home sales over last year.”
We project that the home building business will improve modestly in 2008 as smaller homes are once again produced. We project 17,000 units of single-family housing for 2008 in the San Joaquin Valley,” he says.
Multifamily production has traditionally been negligible in the San Joaquin Valley, typically accounting for no more than 10 percent of output. “We see no change in that picture and project 3,000 units of multifamily units permitted in 2008,” Mr. Nevin says.
Statewide, Mr. Nevin predicts that new-home sales will increase in the second half of 2008, leading to the construction of more than 80,000 new single-family homes this year, up from about 70,000 last year. He also expects production of condominiums, apartments and town homes to increase to about 46,700, compared to about 44,000 in 2007.
Based on what? The need to make a sale?
I don't think it's as lousy as everyone puts on," said Ray Karpe, the immediate past president of the Bakersfield Association of Realtors, a local trade group....
And, he predicted, home prices will reverse direction, and start an incremental climb. "I think home prices, home values, will creep up," Karpe said.
In the next 60 days the inventory levels will start to increase, credit which is already tight will get tighter and the foreclosure levels will continue to rise on a year over year basis. Also, what is wrong with declining home values - this will make them more affordable and will be better in the long run for a sustained period of economic growth and not a boom/boom cycle where the outcome is mostly a losing game.
3) Foreclosure reach an new record:
From the Bakersfield Californian: (be sure to check the PDF files for the detailed charts)
Foreclosed properties also hit annual and monthly highs. A total 3,007 properties foreclosed last year compared to 408 in 2006. The next closest year was 1998’s total of 2,683. December’s count of 421 foreclosed properties set a new monthly record and continued a quickening pace since the beginning of the year, when 103 foreclosures were recorded.