It appears that the people upset by my predictions are most likely homeowners. What I propose, a 50% nominal drop in San Diego home prices, is nothing short of scary. Some homeowners believe they are “safe” from price drops, because they bought a “superior property”, in a desireable neighborhood. (A “superior property” is a property that increased greatly in value during the bubble, but will *not* go down more than 5% or 10% because it is unique, owned by someone who will not be forced to sell, and has few sales, thus commanding higher prices.) For the record, that idea is fantasy. Every property will return to its baseline: its fundamental rental ratio and the price it would be today had the bubble never happened. So even “superior properties” will see big drops. I would need information on the pre-bubble prices of these properties to make a forecast, so I will save that for another day.
They say it is my style that offends, not my message. But hey, I am just a nice girl next door, that has coffee with the neighbors and carpools to church. I believe the threat is not my style, but the message itself.
They say they don’t like predictions, but they were silent when David Lereah told us for all those years that home prices never go down, real estate is a great investment, the changing demographics ensure a new permanently higher plateau. Lereah has the data that I could only wish I had! He doesn’t even have to make assumptions, because he has all the data to make accurate forecasts. But curiously, when he spins around the data he already has, there are zero objections from our real estate bulls. However, my assumptions are stated upfront, I am honest and sincere in my efforts, and it causes a ruckus. It’s very interesting to observe the reactions.
