Wednesday, February 09, 2005

Economist: Bay Area real estate slowing

Associated Press

SAN FRANCISCO - The San Francisco Bay area real estate market, which has maintained its value despite a national recession and defied predictions from economists for more than a decade, may have hit its peak, a prominent economist said Wednesday.

"I expect to see a flattening," said Edward Leamer, director of the Anderson Business Forecast Project at the University of California, Los Angeles.

Leamer was speaking to about 250 people, mostly clients of the event's sponsor, brokerage firm Hoefer & Arnett.

Leamer also said the national housing market showed signs of weakening and warned that eight of the last 10 recessions in the United States started with a plunge in home sales and prices.

Leamer, who accurately predicted the coming of the 2001 recession a year before it hit, has been forecasting a Bay Area real estate turn since at least 2002. At that time, he asked rhetorically, "What are they smoking up there" when writing about the Bay Area housing market.

His latest forecast comes at a time when Bay Area housing prices continue to set records.

The median price paid for a Bay Area home in December was $533,000, matching the record high set in November, according to DataQuick Information Systems. That median sales price reflected a 16.4 percent increase from December 2003.

The median housing price statewide is $405,000; the nationwide median is $218,900.

In June 2002, when Leamer commented about the soaring local real estate market, the median price of a Bay Area home was $416,000, according to DataQuick.

The tracking firm disagrees with Leamer's outlook.

"We just don't see it," DataQuick spokesman John Karevoll said. "We are seeing statistics that are very stable. They are consistent and they run deep."