You paid $1.4M for your house in 1994. Someone else paid $1.1M for a comparable house in 1995. That’s a 21% reduction in 1 year.
In a correction, price reduction decelerates near the “bottom”. 1994 is near the “bottom” of the last correction. I don’t think prices (in the LA area) went down 21% in 1 year during that time. I think you paid too much for that house in 1994.
Bear one thing in mind. The median price in southern CA bottomed out in 1996. But the “real bottom” was in 94/95. Here’s why:
At the “bottom”, prices were so low that one can buy a home as an investment (i.e. to rent) and have “possitive cash flow”. As a result many “cash flow investors” jumped in the market and they bought entry level homes (b/c these homes are easier to rent).
Since the median price is the mid-point of the real estate transactions, the activities of the “cash flow investors” dragged the median price down. Even though, in 1996, demand for entry level homes was already up, sowing the seeds for appreciation in the move-up market (mid-range & luxury homes).
I remember this because, in 1996, I lived in SoCal. At that time, I was saving for a down payment. In 1996, I read in the newspapers that the job market was picking up & the number of RE transactions was going up. At that time, I didn’t have enough money for a down payment, I remembered thinking to myself: “If prices pick up soon, I may miss this train …”
