Eclipxe says-> “Two homes up my street just sold for >$100 sqft. Similar sq footage as mine. I got in at around $95 psqf.I’ll call a bottom along with TemeculaGuy.”
Eclipxe, your example hardly qualifies as a total representation of the market to make such a bold statement, does it ? For example, I know of two beautiful properties that sold earlier this month, a 4000 sqft. in Vail Ranch that sold for $81 sqft., and another beauty in one of the nicest hoods in Red Hawk for $84 sqft. The comps in Red Hawk sold for $110 in late 2008.
As for your comment regarding government intervention, you are correct that its massive. But the point I’m making is that the most important interventionist policy thus far has been the moratoriums – both by the government and by the banks/Fannie/Freddie. Because of the moratoriums, the supply of new properties hitting the market has been curtailed during the last three months. But those moratoriums are now OVER, at least for now. This isn’t rocket science…as supply once again increases, there will be downward pressure on prices – particulary with the high unemployment numbers . The Feds will try to their hardest to artificially reduce supply, but one way or the other, the market has a way of eventually correcting itself.
And I’ll add one more point – mortgage rates have only one direction to go, and thats up. What type of predictions will you all make next year if rates are at 6% or 7%, while unemployment is projected to be near 11% statewide ? Under that scenario, my estimate is that housing prices will remain flat at best.
I’m not a bull or a bear, but a realist. The economy is nearing the end of the deflationary cycle, thats true. But coming soon is the second part of the equation, which is inflation. With their efforts to reinflate the economy, the Feds are creating future inflation that will be every bit as nasty as the deflationary cycle we’ve experienced for the past year. If inflation gets out of control,(spending trillions has a way of doing that) mortgage rates could skyrocket like they did in the late 70’s. I’m not predicting they will, but I wouldn’t be surprised if mortgage rates are in the 7%-8% range by the end of 2010. Higher rates alone will kill any housing recovery under that scenario when factoring in unemployment numbers.
