One note of caution when making comparisons based purely on ppsf, the houses that were available in Murrieta and Temecula in the early part of the decade tended to be smaller than what was being constructed at the top of the market. Most of the low price psf leaders we are seeing today are homes that have very large sq footage that generally was not available in 2000-2001. 3000 sq ft was a very large house in 2001. By 2005 there were many 3500 and even 4000 sq ft houses being built in this area.
That said, as I mentioned in my earlier post, if we maintain the current rate of decline we should see 2001 prices in 2008 which would put 2500 sq. ft houses into the high 80’s and low 90’s ppsf.
Heres an example of whats going on in one Murrieta tract.
Standard Pacific built a tract that they sold in 2001 and 2002. There were 3 models with square footage between 2400 -3000. The ppsf was in the high 80’s and low 90’s. By late 2002 the resales in the tract were in the $100-110 ppsf range. By 2006 homes sold for as much as $200 psf (mortgage fraud). I owned a home in the tract that I sold earlier this year for $150 psf. The lowest repo price today in the tract today is $120 psf and not selling. If I throw out the fraud sales there is still a 20% drop in less than a year. If 2008 is as bad as we all expect it to be that should take us right down to the original selling prices of 2001.
