Tuesday, September 4, 2007
Overvalued real estate markets - Napa, CA
Is there anyone out there that will seriously argue that this chart looks reasonable. As of the third quarter last year, prices in Napa CA were 106 percent above their long run trend. In the five previous years, prices had increased by 91 percent. Look more closely and we can see that Napa had suffered from a bubble in the late 1980s. However, that bubble now looks like a blip compared to the today's monstrosity.
The latest house price data will be shortly available from the OFHEO. What is the betting that Napa prices have started their long journey back to normality.
Posted by Best at 10:06 AM