tate (Larsen, personal interview, Apr 1, 2004).
The Larsens made another discouraging discovery: prices in the Northern California region are high, inventory is moving quickly. Their California real estate agent has had difficulty finding properties for them to look at because houses simply are not staying on the market for very long. In some cases, houses did not last until the weekend; in other cases, houses have sold before they even are listed on the Multiple Listing Service (MLS). Thus the Larsens, like other California homebuyers, face high costs and high turnover as they struggle to purchase property.
The Larsens are not isolated in the housing problems that they are facing in California, nor are the problems limited to one region. High housing prices are problematic in both Northern and Southern California, and homebuyers are increasingly considering communities with longer commutes in order to afford a home, a decision with long-term quality of life issues associated with it. Some California residents are cashing in on their home's value and relocating to other parts of the country where the real estate market is less robust; Californians who sell and relocate within the state are finding that it is difficult to make anything other than a lateral move as prices have increased at nearly every level of the market (Wood, personal interview, 1 Apr 2004).
At the heart of the housing issue is the fundamental question, is the housing market in California overvalued? This research considers the problem based on interviews with real estate professionals, financial professionals and secondary sources.
According to a real estate agent in Southern California, the real estate market is supporting higher prices and faster turnovers than at any time in 20 years (Wood, personal interview, 1 Apr 2004). Houses that are coming on the market are selling quickly--assuming that they are priced in keeping with the market--to the...