Keep in mind, we are basically in agreement about the next few years. We differ on the severity of the drop and the supply/demand dynamics are the key to understanding it – not “regression to the mean” which doesn’t take market dynamics into play at all. It is just tinkering with numbers that may or may not predict the future. What regresses to the mean? Who knows. It is an easy analysis that doesn’t tell you much, IMO. Again – supply and demand is the key, not regression to the mean. I just think it is the wrong analysis to do.
We agree the picture is bleak for the next few years, but the long-term demand side is not as bleak as it may appear.
Yes, all those folks left San Diego for Phoenix, Vegas, Texas, and other places they really don’t want to live after living here. Yes, “many people who sell are leaving San Diego.” But that doesn’t mean they can’t come back ever. If prices drop by 30%, they’ll be back, maybe sooner.
When looking at the supply/demand picture, it is important to understand that when prices drop, demand goes up.
As the bubble deflates, and prices come down, people will be attracted to the market. As we’ve all said – it is better to buy a low-priced house with a high interest rate than a high-priced house with a low interest rate. Realtors will push this motto hard.
In another thread you asked (paraphrased) “What does it take to get buyers excited about the market again?” and I said “lower prices.” When the SFR median is 25% down, that means some neighborhoods and condos will probaby be down 40 or 50% and people will start buying again.
These are the kind of market dynamics to analyze to help gain insight into the future, not charts like the ones in your links.
