http://tinyurl.com/yp5r5j

That sucking sound we all hear is America’s Black Hole, starting the ‘Really Big’ feast of its lifetime.

We have crossed the Event Horizon – and there is NO EXIT for anyone, UNLESS.

This Black Swan event is no accident.

Click on my name to SEE! – All (and UNLESS).

johnChun…I dont appreciate your BS on my blog but I agree with SOME of your conclusions, which is why i posted it. No need to size up John, we are all friends here.

That’s probably true, and I tried in my post to be mindful of the naturally uneven nature, of price–that the index cannot capture. Further, I allowed that Prime had not broken. Yet. But I asserted that Prime would indeed break. (I probably define Prime like most others would: selected Marin, City of SF, Berkeley and OAK hills, select Peninsula especially in Google-Towns).

However, I think it’s hardly much of an intellectual leap–when you look at the tentacles of the Housing Crash–that Prime can remain Islands of Price Stability. The plague is now well advanced right into the Bay Area, and it’s kissing right up against all these Prime areas. They will fall.

One of the hoariest phrases in the real estate market is that “all real estate is local.” I agree with that, but, not during Bubbles and Crashes. In those, the rise and fall is systemic. It’s nationwide, it’s “nearly” everywhere.

The housing bubble was easily a 2 standard deviation event. The Crash will be no different. If not worse.

AND IF USA WANTS TO BE #1 AGAIN WE MUST:
1=250-300 Nuke plants @$1B each=Grants! Similar designs 4 easy build & maintenance!
2=New law 50% of all cars in 5 years must be Electric & 25% must 50 mpg hybrids!
3=100% Employment by 2009 from above!
4=In 5yrs USA oil/coal consumption down 50-75%!
5=In 10yrs USA will be #1 AGAIN!
6=USA Debt & Social Security paid in Full!
7=If necessary, Guzzler tax for big engines & Tax Credit for Sipper & Elect. Cars!
8=$2-10 Trillion Cost to reduce oil 70%!
9=We all know this is correct & right!
10=USA will be #1 again for 50 years or longer!
11=We can buy out Canada & Mexico based on Energy Efficiency and Surplus!
12=Every Illegal can get a temp 5 year green card by purchasing a home in foreclosure and making payments for the term of their green card. Filing a tax return, paying taxes and staying employed. 5 years extension for being good. 11th year can file for citizenship!
13=There, all our problems solved in one simple BLOG!

Looking at the Latest Case-Shiller data, the Lamorinda area (Lafayette, Orinda, Moraga) has not depreciated at all YOY. In fact, median home price is up 1-3% in both areas. However I did find a very interesting statistic. In Lafayette, for example, median household income in 2000 was $102,000 and median home value was $583,000, for a ratio of about 5:1. Higher than the historic 2.5-3:1 ration, but for an upscale area, seems reasonable. In 2005, median household income was $111,000 and estimated home value was $1,284,000. Ratio is greater than 10:1.

So did the residents of Lafayette double their incomes to be able to support these inflated home values? I don’t think so…

I’s be curious to see what others think about this particular region, where home prices thus far have been “sticky.” But I think they will be slaughtered in the option-ARM resets coming up. If those numbers don’t look like a bubble, I don’t know what does.