This is really getting to be a confusing situation. It appears the primary activity were low end home sales in the south. I have family that lives in Kentucky and I visited earlier this year. Home prices are not disconnected from fundamentals there. In fact you could probably sale a high end home in California and buy a good chunk of the state of Kentucky. Interest rates are still historically low so I can see how activity would increase in these areas. Such is not the case in the bubble markets as we all know. The bulls here in California are on their knees praying for a rate cut. That just got put off with today’s report. It appears we are now heading into the brunt of the ARM Reset / foreclosure storm with mortgage rates going up not down. IMO this is very bad news for California RE. The FED remains in a very tight spot. There are actually rumblings of further rate hikes. This is a worst case scenario for the state of California. Job growth is anemic, retail sales (auto), are down, net out migration of monied population, more college grads leaving than coming in, escalating NOD’s and foreclosures, falling home prices and no relief in sight. Will California be the sacrificial lamb before the FED can step to the plate?? It’s starting to look like that everyday.
