But in large this is a good thing as the market has been over heated. There has been talk of a housing bubble for quite some time now. While I think the bubble talk is somewhat overly dramatic. In the California market this is not necessarily a bubble. There are a number of reasons that housing is at premium especially in Southern California. there still are not a lot of homes in a lot of areas. I imagine that California is going to slowly deflate as speculators are forced to leave the market.
"Everyone has to be careful. The old adage that 'past performance is no guarantee of future gain' is something you have to keep in mind in any situation, particularly when you're following the herd in investment decisions," said economist Steven Cochrane, managing director at Economy.com. "The easy decision to make now is, 'Well, real estate has gone up 20 percent in the last year, so I'll buy some real estate and realize that (gain) the next year.' But eventually that comes to a halt."
Here's one of my favorite quotes from this article though
"It really looks like price appreciation has to start slowing down in the next few months because we're not experiencing continuing innovation in lending products," said Newman, a research associate at Burlingame-based SPHERE Institute, a public policy research group.
The loans aren't creative enough!
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