The Piper Plays 'Different Note' Across The US

This article from Annapolis reveals some cracks in once hot markets. "A look at home purchases in Anne Arundel County during the last four years, along with the last couple of months, shows that while the wild monthly increases have slowed since mid-year, real estate prices are still running 20 percent above last year at this time. In September, the median price reached $329,950, down $50 from August but up 22 percent from a year ago." "Queen Anne's County's market, on the other hand, cooled in September, evident in the dip in sales price and the time it took to sell. Homes stayed on the market much longer, 98 days, compared to 74 during the same period a year ago. Last month, the 87 homes sold had a median price of $337,000, a 6 percent drop from $360,000 a year ago." "'This is nothing new, that's sort of how the picture works in reality,' said Joseph Cater, economist in Annapolis. According to Dr. Cater, the home purchases, and slowing, can be attributed to consumers losing a bit of confidence in the economy. Wages have not increased significantly, and consumers in the last three years, through refinancing, took cash out, and used it as a salary increase, he said." "And that could be a problem in the future. 'There's no free lunch,' Dr. Cater said. 'The piper is starting to play the music, and different notes are being played.'" And in Humboldt County, CA. "A paper by Dr. Erick Eschker, and Soren Messner-Zidell, at Humboldt State University, titled 'Is There a Housing Bubble in Humboldt County?,' (finds) that what has been occurring in the housing market in other major metropolitan areas on the coast is also occurring in Humboldt County. 'The data we present for Humboldt County 1989 – 2004 is consistent with housing price movements in other coastal regions of the U.S. where some believe that a ‘housing bubble’ has formed,' according to information in the paper." "The paper discussed the P/E ratio and stated that it comes from the basic idea of asset pricing: 'The most that you will be willing to pay for an asset is the amount of income that it will generate for you,' information in the paper stated. Regarding housing prices, 'the P/E ratio never rose or fell by more than one point from 1989-2002,' the paper stated. 'In both 2003 and 2004, however, the P/E ratio climbed by three points, so that it was 23.8 in December 2004 while it averaged 15.4 from 1989-2002.'" "If Humboldt County is experiencing a housing bubble, one thing that might prick the bubble is the Federal Reserve’s raising of interest rates, Eschker said. Another reason could be that people might not believe that houses are worth their prices and housing prices begin to decrease as a result." "That is occurring in San Francisco, he said. 'The only thing I’m sure about is the increase in housing prices that we’ve seen in the past few years cannot continue and I’m fairly certain about that,' he said. Eschker said another area of concern is the bigger impact of housing prices." "Individuals who have taken out second mortgages on houses and who are 'mortgaged out' may have to foreclose on their properties if housing prices go down, he said." "(Real estate broker) Betsy Thode..told The Eureka Reporter that there were around 400 housing listings in the county around Sept. 23 and there were less than 300 two months previous to that time. 'The housing prices are still high (compared) to income in the area,' she said. 'Incomes have not (increased). We just don’t have the economy to support the prices.'"