Delores Conway, director of the Casden Real Estate Economics Forecast at the USC Lusk Center for Real Estate, said the price rise reflects a trend toward equilibrium, though other experts say the effects of the subprime market’s troubles may not have fully played out. “Right now everything looks like it is stabilizing,” said Conway, who considers the April price rise negligible in itself. “So far we’ve seen an orderly decline in volume and an orderly stabilization of price.” Nationwide and locally, foreclosures are rising to levels not seen since the last housing bust in the early 1990s as some holders of subprime, adjustable rate mortgages fail to make payments. At the same time, the pool of available buyers has shrunk as lenders of all stripes tighten their credit criteria. However, Conway said that barring any major downturn of the economy, she does not expect prices to fall, given what she refers to as the “downward stickiness of housing prices.” “People are very reluctant to lower the price of their homes when they’re selling their homes,” she said. “Instead, what they’ll do is wait.” Conway also said that the decline in sales volume may represent a more normal market as the higher levels of the past few years were inflated by the activity of investors who sought to make a quick buck by buying and flipping housing – sometimes without not even fixing them up. “In 2005 and 2006 there was quite a bit of investment buying,” she said. “Once those buyers left, that reduced volumes tremendously.”
June 1, 2007