Powder Blue Report

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Saturday, January 01, 2005

Orange County Real Estate Market

I am by no means an expert on real estate. I just play one on the internet. The growth in value of southern California real estate and particularly Orange County real estate has been nothing short of amazing. Again we ended 2004 up another 24% in the median value price of an Orange County home. That value stands at $545,000 now. My prediction/projections for this year are for the market to steadily keep increasing in value. Demand is still so high for this precious commodity. There simply is not enough of it to go around and fill the demand. Even if interest rates rise this year, I still think the values are going higher. It's going to take a lot of factors to turn this market around. On the other hand, if it does turn around, I would look for a 20 to 30% retracement. It is badly needed. This market reminds me a lot of the NASDAQ bubble of the late 90's. Interestingly, The Chicago Mercantile Exchange is developing a real estate based trading contract(like S&P futures), for investors/speculators to hedge and or bet on price swings in the market. This would be a neat tool for homeowners who are worried that the value of their house might go down, to hedge their real estate holdings by selling/shorting futures contracts. Stay tuned here to my blog for further developments in this area. For everyone else out there, my advice when it comes to real estate now is go ahead and buy that house you've been dreaming of. As long as you are going to be living in it for at least the next five years, I don't think you can go wrong. Real estate is still one of the best investments out there.


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