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Michael Youngblood is a senior analyst and research director of asset-backed securities of Friedman Billings Ramsey & Co. in Arlington, Virginia. According to an interview he gave to the issue of BusinessWeek, May 15, the idea of a national bubble in residential real estate, is fiction. Since there is no national residential real estate, there can be no national housing price bubble.

There are, however, Residential real estate bubbles in 75 housing markets it studies. Most are in the East or West Coast. San Diego housing market Residential is one of them. In a study conducted in 2002, San Diego is a city of bubbles for which Youngblood several problems with several Other cities in California and elsewhere. However, recent research has shown that residential real estate markets in these cities in California are more optimistic than previous projections and discussion.

Youngblood evaluated prices of residential real estate markets in 379 metropolitan areas official statistics, including San Diego. Most forecasters residential real estate indicators reagent used to predict future market changes, such as inventory to sales ratios and the number of months needed to sell residential real estate. Youngblood believes that these indicators do not predict market developments, but only to react to market changes. It has created its own economic model based on two indicators predictors that are the real drivers of the housing market. They are the growth of employment and personal income growth, which affect the ability of a buyer, the desire and willingness to buy a house and at what price. Their results are much more optimistic than others forecasters and show a much stronger market for residential real estate analysts that most of the other suspects.

Youngblood predicts the largest declines in residential real estate market in other states of California. He sees two Bakersfield and Stockton showing the largest gains in the State of 43 and 39 percent respectively. The state of Florida should expect substantial gains.

While many analysts find the price of residential property are over-inflated in California and Florida, these markets are driven by speculation that ignores factors underlying fundamentals. Based on historical data, there are bubbles when the median price of existing homes are 6.8 times higher than the per capita personal income of housing market in particular.

According to Youngblood, bubbles can persist for long periods of time, as long as local economies are good. With a recession in the local economy, there is usually a lag of one year before the crisis affects the housing market. Same then the market drops over a long period of time.

Given Youngblood predicted gains in California, there should be no significant reduction of price in 2006 in San Diego real estate. People are not necessarily afraid to buy or invest in this bull market, although the prudent spending and well informed is always a smart way.