Personally, I’m not seeing a 12% reduction in Carmel Valley prices in the last year. Maybe 0 to 6% in established areas 5 to 15 years old. Maybe a little more in some of the one to two year old tracts in the eastern part of CV.
The eight factors you mention make some sense to me. The weakest areas in the next couple of years are definitely going to be newer tracts with large Mello-Roos fees, although I’m not looking for anything like 35-50% drops.
The main reason I’m responding to your post, though, is the comments on the RSF Covenant area being immune to price drops. I noticed that someone else made this comment a week or two ago, and my experience is that the Covenant area did drop in price quite a bit in the early 1990’s. I don’t think that anywhere in San Diego is immune to price drops. When prices fall, they fall everywhere, just like when prices increase, they increase everywhere. One neighborhood may increase or decrease faster than another area one year, but the next year they will probably adjust so that the overall increase or decrease over two years will most likely be similar. It’s the principle of substitution.
In RSF, it maight have been true that some of the homes in outlying areas outside the Covenant fell by a higher percentage from 1990 to 1995, but I know for a fact that Covenent prices also dropped a lot. I recall doing REO appraisals in the early to mid-1990’s in the Covenant area, and there were quite a few REOs in that area. A bank that I worked for in the early 1990’s had several REOs in the Covenant, and I can recall some houses fell in appraised value by more than $1 million over several years, say from $3.5M to 2.5M.
