Homeowners today are totally clueless about market cycles and how they work. They think that just because they take their homes off the market it is somehow going to “protect” the value from declining, that is just being very naive!!
You see there are always going to be sellers who will NEED to sell, and those sellers will have to either cut prices or foreclose..simple as that. These actual transactions will of course set the values of homes. Then there are those that bought a few years ago and have the luxury of lowering their asking prices and settle for a bit lower profits.
Whether it is a first time buyer or an existing homeowner looking to upgrade, the demand for housing is just gone..and of course it would because it was never legitimate to begin with, it was speculative and artificial.
With tigtening lending standards and the realization that the market is in a downcycle first time buyer demand is nonexistant.
As for existing homebuyers, they cannot upgrade unless they get the asking price on their current home which is highly unlikely in this market.
It’s all a question of demand vs supply. Demand has virtually disappeared, so the only possible scenario is prices aligning to a level which creates demand based on economic fundamentals like income and affordability.
This is not rocket science folks… actual prices are down 6%, *LIST* prices are down more like 10-15%, I’ve seen $600k properties with as much as a $100,000 price reduction, that’s a 16% reduction right there to start! Not to mention foreclosures are up 140% in Orange County.
Due to the quick nature of the downturn so far I’m predicting a minimum 20% drop for SoCal by mid next year, with more gradual declines over the next few years. That is my guestimate 🙂
