Slate had a story on the collapsing housing market in Orange County, California recently, noting the ties between Irvine as corporate headquarters to some major mortgage lenders and the rapid decline in house prices.

The story linked to the Irvine Housing Blog, which I’m finding oddly gripping, despite the highly repetitive nature of its posts. Maybe I’m just enjoying the author’s regular trashing of real estate listings featuring MANY!! EXCLAMATION!! POINTS!! The breakdown of the loss incurred on sales of recently-bought houses and the comparison of optimistically- and realistically-priced houses on the same street (and in the same 90+ days listed environment) is fascinating. And then there is the fact that the same talking points:

– housing can only go up
– sure it makes sense this house is worth $80,000 more than it was last year
– you’ll never have a problem selling in this great neighbourhood
– migration to this area means the market can never go down

… that are heard here precipitated the fall there.

Oh yes, I know affordability is still good (though declining). And there’s no subprime market here — though there is an ownership culture taking hold that considers renting, even when financially more attractive, as failure. However, there are other potential warning signals, such as the fact that housing prices — and sales — continue to outpace the economy in Ontario. From RBC’s July provincial outlook:

Despite strength in various service industries, Ontario’s employment growth for the first half of 2007 continues to lag behind the national average. Housing, however, remains a support, with prices now consistently growing at a 5% year-over-year pace and resale activity still elevated.

Um, great. I guess.