Also, certain urban trendy areas and coastal areas in coastal CA counties are “immune” from large (and fast) price declines. SD would have to successfully be attacked with nuclear weapons for that to happen.
Yet we had 2007-2009 and 2011-2012 as periods of decline without any nuclear weapons being involved.[/quote]
I don’t recall any declines in these areas. I recall a VERY few TOTALLY UNINHABITABLE beat-up foreclosure listings which would take at $200 – $300K to become habitable but don’t recall declines of any magnitude in these areas. Example: 92106 and southern 92107 (which were the communities most prone to attack :0).[/quote]
In our area, which is considered a rather desirable area, prices fell by about 25-30%, on average from 2007-2011. Some individual houses fell by more, some less.
Back in the late 80s/early 90s bust, we were looking at properties on PCH in Malibu that had fallen in price by over 40%.
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So, what does it take for a decline of at least 10% in any housing market?
-an increase in supply while demand remains flat or fails to keep up with the increase in supply
-a decrease in demand while supply remains flat or fails to fall with the decreased demand
-money becomes more expensive (interest rates go up)
-other investments become more favorable relative to housing
-the lemmings realize that the top has been hit and they all try to cash out at the same time
-concurrent with the masses stampeding for the exits, investing in housing loses its cachet so demand can decline as dramatically as supply increases
-people think that prices are peaking, so those who still do want to buy will offer lower and lower prices
…
It doesn’t matter how many people own their homes free and clear. The prices are determined by the buyers and sellers who are actively in the market; prices are determined at the margin…always. Wanting a certain price, or insisting that one’s house is worth a certain price, doesn’t make it so.
