20% by the end of the year?
I think it depends on:
1) whether it’s a house or a condo
2) the area that the property is located in
There are plenty of new condo’s that are already being sold with 20% reductions in the form of prepaid, association dues, free upgrades, etc. The buyers of these properties are not very savvy because the selling price stays high and that translates to higher, yearly, property taxes and a higher mortgage payment. If they could negotiate the “freebies” as a cash discount, they would be far better off……….but then everyone else who purchased in the same building would be hounding the builder for a rebate and it would establish lower price comparables for the building. If you track the asking prices for condo’s in the more desirable areas of San Diego, you will see that some have already reduced their asking prices over the last six months by 10-20%.
Single family houses in the more desirable areas are probably going to ramp down at a slower pace and my guess is 10% by the end of the year. By September of 2008, reality will probably have set in with most of the people who really have to sell and if they have any real equity in their properties, they will take what they can get and move on………I’m guessing an additional 15% over my 10% prediction for 2007. My guess is that 2009 or 2010 will reveal the bottom which will be another reduction of 10-15% for single family houses. Then, the market will stay flat for quite a few years due to the inability of people with lower credit scores to obtain a mortgage, lack of buyers who can come up with a required down payment and/or prove their incomes to the satisfaction of the lenders who are going to tighten down like a clamp so that this mess doesn’t happen again.
I may be wrong………….but chances are………..I’m correct or darn close to the timeline and percentages.
