NORTH COUNTY ---- Disputing recent warnings of a housing bubble, the University of Southern California's Lusk Center for Real Estate said in an statement Tuesday that the housing market remains strong, and nationwide prices should increase by 2 percent to 8 percent for the rest of the year.
In Southern California, economic fundamentals such as employment remain strong, said Gary Painter, the center's director of research.
"To cause a pullback in prices, you need negative shocks, and we can't read that in the data," Painter said.
The Lusk Center issued its statement in response to reports from the UCLA Anderson Forecast and Merrill Lynch, which released housing studies Tuesday, warning of a housing bubble, said Francie Murphy, Lusk spokeswoman. They did not issue any backup report for their statements.
Painter agreed with an observation by the Anderson Forecast that rental rates and the price of buying a home have become disconnected, with rental rates remaining flat while housing prices soar.
However, Painter disagreed with the Anderson Forecast's conclusion that this decoupling means the housing market has become imbalanced. "Rents tend to be set by long-term agreements, and landlords may not be able to raise prices as fast as they might like," Painter said.
Alternatively, Painter said the disparity may simply mean that renters and home buyers are two different markets, and the rental market won't bear the price increase home buyers are taking.
Painter said coastal areas such as those in San Diego County will be less attractive to real estate speculators because prices have risen so dramatically over the last few years. That means there is less potential for gain, and it takes more money to buy in, he said. Instead, speculators are turning to Phoenix, Las Vegas and other inland markets in Western states.