As I reviewed this page, several things jumped out. First, an experienced real estate investor, with 40 years in San Diego entitlement planning, tells us that coastal San Diego property values will keep climbing:
“I see coastal California values (especially in San Diego) staying flat or even increasing a bit over the next several years. The west coast is the edge of America and there is a lot of wealth chasing a very limited amount of livable land near the coast (especially in th prime coastal areas), not to mention the tremendous pressure by environmentalists to limit development in the coastal zones, which will continue to exert upward pressure on values.
I’ve lived on the coast my entire life (58 years) and I have never seen a correction that even comes close to 50%. To the contrary, I have seen values steadily increase, albeit very slow.” – docteur
Then, an appraiser, saying a 50% drop is possible.
“It’s strange that as a society we seem to be able to comprehend the 300% increase ($200,000 home increases to $600,000 current price), but we can’t wrap our minds around a 60% correction ($600,000 decreases to $240,000). ” – bugs
What is so difficult about imagining prices going back to 2001 levels? That would be just be a continuation of a trendline, i.e. if we had never had a bubble.
I can tell you why this scares people so much: because the equity created since 2001 has been spent. Thus, a return to 2001 levels is not just a popped bubble (disappointing but can be accepted), but a popped lifestyle, as the equity has been turned into debt.
When the stock market lost $7 trillion, the government didn’t hand people back their money. It was mainly the middle class and rich who lost money there. Now, homeowners, from poor to rich, will lose even more in equity as the housing bubble pops. What can the government do to stop it?
I’m glad we had a poster from Coimbatore to reinvogate this thread. It is just as valid today as it was back in May.
Regarding coastal values: I would need to research how much they went up, to say how much they will fall. How much did they rise since 2001? Does anyone know? Then I can correct docteur’s assertion that coastal prices will keep rising. They won’t. An exception could be a very unique property. docteur once posted that he would buy one of only 6 available homes in the county with boat docks. Such a property is unique enough that it can conceivably hold its value. But the rest of the everyday homes, builder tracts, will go back to 2001 prices, and the percentage drop just depends on how much it rose. Back to 2001 prices, that is my best guess.
