I don’t understand what everyone is celebrating about. It is way to early to claim victory on anything. Sure the subprime market took a big hit and the low end is struggling but nice properties are selling much better this year than last albeit at slightly lower prices. If you aspire to a condo/townhome or a lousy property in a less than prime area you are starting to see some price deflation but I don’t see this group aspiring to that.
Also, the idea that 1st time buyers drive the market while valid is vastly overstated IMHO. 1st timers generally start in condos/townhomes here and progress to starter single family homes but above that the connection is not so direct. Many “Move-up house” buyers come from outside the area and many are actually move down buyers.
If I were to buy a new home I would not sell my current home as it would generate about $1,000/month positive cash flow. I could easily put 20% down and afford the payments on whatever I wanted. An extra $1,000 cash flow certainly wouldnt hurt either.
Here’s more proof, in the first 2 weeks of March 2006, 97 $1M+ homes went into escrow. If you consider that homes went down at least 5% over this time last year and look at home for $950,000+ you get 152 homes. Even if you dont adjust the price you get over 130 homes this year.
If you look at homes between $600K and $800K, in the first 2 weeks of March 2006, 229 homes went into escrow and sold. If you consider that homes went down at least 5% over this time last year and look at homes between $570K and $760K you get 244 homes. Even if you dont adjust the price you get flat sales numbers this year.
I just sense that folks are a bit too anxious to reap some sort of reward for recognizing the bubble which reminds me of the folks who were too anxious to reap some reward not recognizing the bubble. Human psychology is fascinating.
