I don’t get it…. Why would prices only go to 2002 levels? This makes no sense to me. I hate to be the gloom and doomer – but I don’t think that 2002 prices are realistic.
I think that prices will go down to about 1998 levels. Remember, there were people bailing on SD home prices in the early 2000’s. There were articles about how crazy prices were. We bought in Carmel Valley in 2000. Paid 810K for a house which we sold for 1.4M in 04. Now a neighbor has his house up for 1.7M. 810K was crazy for that house in 2000. Forget about 1.2 in 2002. Do you really think that prices which went up by 15-20% each year will then only fall back to 2002?
My house in CV was 450K in 1995. In 2000 it was 810K. Again remember, that we considered (and everyone else I knew) that 810K was a crazy large amount of money for that house.
I am AMAZED at the reluctance of people believing that they are in a bubble, even when it is bursting. I am amazed at how people believe that with 1-3% interest rates (2002?) that this is a normal part of the market. That house should be 700K… It will be 700K again. 2002 prices were still brutally above where they should have been.
First of all — DON’T believe the CRAP you are hearing in the papers and on TV. The “Experts” claim that prices will still fall be a few percent until 2008-9. Now some are saying 2010. These are the same experts which said that we would have a flat market this year (and recover by the end of 2007).
Scenario. People are incredibly afraid of real estate right now. Only idiots are buying houses now (getting that free kitchen and the right to own a mortgage!). This will continue as more and more fallout in the market happens. Do you really think that the market has fallen? It is just DEAD. Falling happens over time, just as rising prices do. It will go down and down. Equity will be DESTROYED. This will savage the economy. Prices will continue to fall to the affordability level.
Also realize that the Case-Shiller graph is the NATIONAL average…. Our graph would have a much higher amplitude tha n the national graph. Case shiller shows that through 2006 we were 200% growth…. In reality this boom has gone up almost 300%… There is NO reason that it couldn’t even go negative as the economy goes into a depression. If you think that this is impossible – just look at history…
I am not hoping for this, I am just afraid of this.