I posted my response before I saw all of newguy’s posts, but it looks like my guess of his buying approximately 200K below the peak was pretty close.
Anyway, here are some things I’ve noticed about the Temecula Valley housing market and I think these have held true since before the boom, during the boom, and even now, after the boom:
1) Most home buyers up here are people moving from San Diego and want a faux riche house without paying SD prices. The vast majority only look at brand new houses and are awed by the faux riche models.
2) The builders set the prices. Resale homes don’t really sell for any more than comparable new ones, regardless of how much the people spent on backyard landscaping, pools, upgrades, decorating, or anything else. I think this is due to #1.
3) I think #1 and #2 are due to the continuous stream of new construction up here. How can houses appreciate when the builders keep popping out new houses at incredible rates? The only reason house prices increased at all up here is purely the speculative bubble fueled by loose lending – that’s it!
That said, the builders now appear to be ratcheting the prices back down the same way they ratcheted them up. Now we also have the additional pressure of massive waves of foreclosures and short sales coming on the market. My guess would be that before too long the builders will pull out once they’ve lowered prices as low as they can and still make a profit. At that point, the only sales happening will be foreclosures, distress sales, and short sales. We’re now about half way to a 50-60% price drop IMHO and I’m starting to see how we’ll get there. This will be of biblical proportions.
