Asking prices do not mean much, there are still many people reaching in price on their asking numbers. It is my opinion that this is what is causing such a high number of price reductions up here in OC. People have unrealistic asking prices trying to jump above the last sales price in a comp when the mkt is not higher overall. This is the 10th year in the cycle, so it was unlikely that prices would drop prior to now. Be patient as everything is now lined up perfectly for a reversion to the mean, the cycles, interest rate hikes, drop in existing home sales etcc..

I was my feeling all along that the peak would be mid this year, and I was a bit off as it actually occurred in the 4th qtr of last year up here in OC and maybe a bit sooner in San Diego. Prices will begin to come down in the second half of this year, and next year they will accelerate down by my models.

You have to be patient as real estate is not a liquid asset so it is not going to drop exponentially overnight, it will take a few years but it will happen.

When you hit the top of the market, asking prices go up, but selling prices don’t, and sales stall.

This is exactly happened in my zip code (92117) back in August (that’s 7 months ago). Many of the houses never sold – they were taken off the market or rented out.

I sold a house in August so I am intimately familiar with this zip code. My asking price was much lower than most asking prices, but right in the middle of comparable closing costs and sales started stalling right about then, too.

Also, the few things I have read about Orange County indicate they are about 6, maybe even 9 months behind San Diego in terms of the bubble deflating. Your article suggests the same thing to me, if the increased asking prices stall the market.

Keep an eye on sales volume and closing prices. They will be more indicative of the market. Also, keep in mind sales volume typically jumps about this time of year so if even it it goes up a bit, that still may indicate a stalling market.

D

Starfish,

We’re in the same boat. We sold our home a year ago and we’re trying to time the market.

While I don’t think a drastic decline is certain, a reversion to more normal pricing is probable. That can happen two ways (or more); either prices come down quickly or they stay flat for a long period as values rise to meet current prices.

In the meantime, the cost of renting is much more favorable than buying. At a multiple of 28.5 (take the price of a residential property and divide it by the total annual rent), we’d have to see five years of mid-teens percentage appreciation just to break even.

As for the asking price data, it’s very hard to conclude anything from that data. It’s subject to so many questionable factors. The source of the data, realtors, is not without a huge conflict of interest.

Stick in there, it may take another year before prices start to decline. In the meantime, you have the lifestyle of a renter, never a bad thing.

Best of luck,

Cal