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  • October 11, 2006 at 4:43 PM #7722
    DrHousingBubble
    Participant

    Does anyone notice how the media has been avoiding actual nominal drops in prices? Instead they rather use percentages because somehow this softens the actual reality. I give credit to the following article for posting some actual facts:

    http://www.signonsandiego.com/news/business/20061011-1231-bn11homes.html

    In real dollar terms the loss from peak is $42,000. Not a small amount by any stretch. In addition, if you were to sell and bought at the $518,000 peak, you would also be out the additional 6 percent especially in the current buyers market.

    Overall the loss would be over $70,000. Forget about money saving renting over buying for the two years and trying to find a buyer at $476,000.

    Many have seen the Moody’s article that claimed we would see a bottom at -8 percent. Uh, we’re going to hit that in November or December not 2008.

    Sorry but I have a feeling that the drop will be a lot larger than many have imagined.

    October 11, 2006 at 4:55 PM #37712
    woodrow
    Participant

    Personally, I’m looking for mid-December as a watershed moment. We’ll get November’s numbers ~ Dec. 15, and if that median is 466k or below, the YOY decline will be double digits (518k to 466k is almost exactly 10%).

    When the headlines begin showing double digit YOY declines it should drastically cut down on the greater fools out there who are still overpaying for SD RE. Downward pressure on price snowballs with fewer sales, and next springs comps are even lower.

    November’s median being at 466k (or lower) will accelerate the panic.

    October 11, 2006 at 5:11 PM #37716
    sdrealtor
    Participant

    I’ve been predicting this for a couple months. Mid-December is when it will all get real. Double digit declines should strike fear in people’s gut and will lead to another 10% decline over the next 12 months.

    October 11, 2006 at 5:15 PM #37717
    mydogsarelazy
    Participant

    Since you mention the figure of $42,000.00 here is an anecdote about a loss of around that amount.

    A young couple who I worked with bought a house in late 2004 in Wildomar. It was a very deluxe house, around $700k. Their intention was to have it be an investment.

    When the husband got a new job out of state they put it on the market and after almost a year of listing it they managed to sell it themselves a few months ago. They did so after borrowing $40k from their parents to cover their loss.

    I figure they were lucky to get out and only lose $40k, but still, that is a lot of money to burn.

    JS

    October 11, 2006 at 5:17 PM #37719
    lindismith
    Participant

    December, interesting. That should help the economy come a screetching halt!

    Does anyone check Mr. Brightside’s blog? He posts the losses in dollar values, and it’s really crazy how much people are losing on those downtown condos.

    October 11, 2006 at 5:18 PM #37720
    waiting hawk
    Participant

    Be even worse if people would see a 10% delcine and it would also show how much appreciation that has been lost.

    I’m sick and not sure if this makes sense sorry.

    My website tracking Inland Empire

    October 11, 2006 at 11:02 PM #37741
    rankandfile
    Participant

    We must not forget that most of us Piggingtonians are salmon swimming upstream. I agree that things will get worse this winter. However, there are many forces working against us. There are many factions that want, and need, to see home prices NOT fall dramatically (as they should). Realtors, banks, politicans, government, media outlets, developers, contractors, etc. They just have too much invested in it. I truly feel that we are in the minority.

    I am not saying that things will continue to get worse at a faster rate. I am merely saying that there are many in powerful positions that will try to keep this thing from dropping too far too fast. A Fed interest rate cut or two, dropping oil prices, substantial incentives on autos, the classic media-real estate propaganda, and more will all be employed in full force.

    We already see it going on around us. Every normal-thinking person has at least some idea that homes are overpriced, and that they can’t realistically afford them without incurring major long-term debt. Yet, even as prices have more than tripled in some places, we are still being told by some sources that there is just a mild correction taking place – that prices will start going back up again in the spring! Hey, I don’t mind an asset appreciating. My only concern is that wages simply aren’t keeping pace. If I earned 3-4 times what I am currently earning I’d be more than happy to purchase a home at current prices. The money has to come from somewhere, right?

    October 12, 2006 at 8:56 PM #37789
    no_such_reality
    Participant

    Interestingly though, both resale condos and SFRs are both down slightly over 4% from peak.

    Obviously the builders are giving up the ghost on the new home sales.

    If October slides like September did, the January numbers may be interesting. There’s a psychological tipping point just past 10% lower from here. Another 10% down and SFRs fall back below $500,000.

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