[quote=bearishgurl]CAR, I understand what you’re trying to say here re: supply and demand. But RE values in coastal CA counties are determined by sold-comps in their respective “micro-markets.”
For instance, if small dry-rotted “Drogan-style” SFR’s in Loma Portal (92110) have recently sold for =< $500K, you may NOT find any comparably-sized SFR sold comps =<$500K in Plumosa Park (92106), even though the two areas are 1/2 to 1 mile apart.
Even if these two areas were in the same zip code, living in Plumosa Park has several advantages over Loma Portal.
-custom homes (not on tract)
-larger lots
-some wider sidewalks
-grassy traffic circle
-“Historic” low-glow street lamps
-some “Historic” homes
-occasional use of curved glass lends “character” to area
-raised foundations (easier to fix plumbing/heating)
-longtime dog-walking group
-caroling groups at X-mas
Potential buyers for this area may not need a mortgage (or lg mtg) in order to purchase. They may be downsizing retirees or an individual with a construction background who wishes to rehab a personal residence for his/her family or to retire in.
The attractive locations and ambiance of these areas attracts buyers who are not interest-rate and job-sensitive.[/quote]
These areas were attracting buyers who were not interest-rate sensitie or job sensitive 10 years ago, as well. I guess that’s the point: IMHO, we will see the same price *ratios* between neighborhoods/classes of properties that we saw historically. Right now, the spread is artificially wide.
Usually, you’ll see price compression at turning points in the market. At this moment, the artificial Fed/govt supports have prevented price compression from happening. Price differences between the high and low ends is at abnormally high levels, which indicates to me that we are only halfway through the downturn, with the high end set to take the brunt of the declines in the next leg down.
That’s just MHO, and I’m putting my money where my mouth is.
