Their model says SD is very undervalued, and some SD professor called it a "good indicator". What say you pigg's?
I can belive at least another 29% decline may occur especially in CV and other areas where price hold till time. If we guess there is any interest rates spike theory happens (not a theorey but a fact soon) then there should be much longer time to wait San Diegan's to get price on the houses what they have invested or may not even get that price. As per model slowly some areas get hurt or wait for ever.
Submitted by 4plexowner on June 4, 2009 - 12:20pm.
"The median price for a single-family home was $327,300 in the first quarter, the company said. Based on historic trends for household income, affordability and appreciation, the “normal” value should have been $415,300."
the methodology is based on median prices - enough time wasted here - the article is garbage
1985 was the first year considered. It was coincidentally a year in which housing started a bull run. Going back to 1976 and eliminating most of the latest bubble years would show a different story. How can historically unprecedented RE bubble data be used in determining normal valuations? That's crazy. The article was a simplistic attempt to rationalize high valuations.
Hehe, I though all the same things, but wanted to see what I was missing. I like the comment about torturing stats to confess what you want them too. This is water boarding Dick Cheney style. Sadly I think it will be used to justify alot of really bad behavior.
"Second, we caution against over
interpreting the metrics since the historically
normal dispersion of valuations is quite wide.
Specifically, our model has a standard deviation in
house price valuations of +/-14 percent, meaning
that any valuation between 14 percent overvalued
and 14 percent undervalued should be considered
statistically normal."
I feel price vs rent is just about right. The high-end stuff needs to fall a bit more, but for the most part, prices in the SD area should fall to pre-bubble prices.
As others have pointed out, this article is garbage and not worth responding to.
well, it isn't all that worthless.
if one understands that majority of SD's sales are foreclosures in first wave subprime regions, and that this study/article represent such subset of properties, then it is worthwhile.
unfortunately most readers of the UT doesn't understand that and will apply this study's conclusion to places like Carmel Valley, where 2nd wave option ARM and prime defaults have just started gathering strength.
As others have pointed out, this article is garbage and not worth responding to.
well, it isn't all that worthless.
if one understands that majority of SD's sales are foreclosures in first wave subprime regions, and that this study/article represent such subset of properties, then it is worthwhile.
unfortunately most readers of the UT doesn't understand that and will apply this study's conclusion to places like Carmel Valley, where 2nd wave option ARM and prime defaults have just started gathering strength.
Nicely said. Also, I don't think we would disagree that much with their overvaluation metric in 2005. It is quite possible that according to median index that prices are at a bottom, but those who understand the market dynamics and mix of sales would interpret differently than perhaps a layman would.
FSD,
Exactly! Its important to understand the metrric quoted and we could very well have hit a bottom in the median without being close to a bottom in prices due to the sales mix being heavily skewed to the low end. Its kind of like last year when I called a bottom on sales volume and people went nuts around here.
Their model says SD is very undervalued, and some SD professor called it a "good indicator". What say you pigg's?
I can belive at least another 29% decline may occur especially in CV and other areas where price hold till time. If we guess there is any interest rates spike theory happens (not a theorey but a fact soon) then there should be much longer time to wait San Diegan's to get price on the houses what they have invested or may not even get that price. As per model slowly some areas get hurt or wait for ever.
Interesting methodology. Five-year moving avg would give even better results:
http://www.globalinsight.com/gcpath/Hous...
"The median price for a single-family home was $327,300 in the first quarter, the company said. Based on historic trends for household income, affordability and appreciation, the “normal” value should have been $415,300."
the methodology is based on median prices - enough time wasted here - the article is garbage
If you torture the statistics long enough, they'll confess to whatever you want them to.
A garbage article trying to manupulate the information to pump the real estate market.
1985 was the first year considered. It was coincidentally a year in which housing started a bull run. Going back to 1976 and eliminating most of the latest bubble years would show a different story. How can historically unprecedented RE bubble data be used in determining normal valuations? That's crazy. The article was a simplistic attempt to rationalize high valuations.
Hehe, I though all the same things, but wanted to see what I was missing. I like the comment about torturing stats to confess what you want them too. This is water boarding Dick Cheney style. Sadly I think it will be used to justify alot of really bad behavior.
"Second, we caution against over
interpreting the metrics since the historically
normal dispersion of valuations is quite wide.
Specifically, our model has a standard deviation in
house price valuations of +/-14 percent, meaning
that any valuation between 14 percent overvalued
and 14 percent undervalued should be considered
statistically normal."
Ouch that is a wide margin of error!
4 years ago, their methodology would predict that housing price would never fall.
I feel price vs rent is just about right. The high-end stuff needs to fall a bit more, but for the most part, prices in the SD area should fall to pre-bubble prices.
Wrong.
The first sentence in the article indicates that it was overpriced by about 40% according to their method.
Also, the chart indicates that their expected value for the price was just above 350K in 2005, while the median was just above 500K.
As others have pointed out, this article is garbage and not worth responding to.
well, it isn't all that worthless.
if one understands that majority of SD's sales are foreclosures in first wave subprime regions, and that this study/article represent such subset of properties, then it is worthwhile.
unfortunately most readers of the UT doesn't understand that and will apply this study's conclusion to places like Carmel Valley, where 2nd wave option ARM and prime defaults have just started gathering strength.
well, it isn't all that worthless.
if one understands that majority of SD's sales are foreclosures in first wave subprime regions, and that this study/article represent such subset of properties, then it is worthwhile.
unfortunately most readers of the UT doesn't understand that and will apply this study's conclusion to places like Carmel Valley, where 2nd wave option ARM and prime defaults have just started gathering strength.
Nicely said. Also, I don't think we would disagree that much with their overvaluation metric in 2005. It is quite possible that according to median index that prices are at a bottom, but those who understand the market dynamics and mix of sales would interpret differently than perhaps a layman would.
FSD,
Exactly! Its important to understand the metrric quoted and we could very well have hit a bottom in the median without being close to a bottom in prices due to the sales mix being heavily skewed to the low end. Its kind of like last year when I called a bottom on sales volume and people went nuts around here.