People thinking there will be big price drops are incorrect. Price drops will be due to inaccurately priced homes that were listed to high to begin with. Once the supply normalizes compared to previous years the only major source for depreciation in San Diego will be due to the lending rates. You may see a small depreciation that will accompany the “normalizing” of the market but that is not a trend setter. The larger declines will be only tied to lending. That will be off in the future, but not in the short term.[/quote]
I agree with you SD Realtor that there shouldn’t be HUGE price drops like back during the Great Recession. People have to understand what we had going on was the “perfect storm” of events all happening at the same time. I still kind of laugh when people try to say that what happened the last time was a normal Recession. That isn’t true.
While I do think prices can dip again, I don’t really see a situation like the last time around where prices fell so precipitously. I do agree that once interest rates go up, prices can depreciate but I don’t see it happening so fast and hard like last time.
Most of the people I know that are looking to buy aren’t buying to “flip”. They want to buy a home to live in to raise their families. I do see more and more inventory coming on the market now so that should help slow things down.
I do NOT think it is healthy to see the drastic price increases so quickly. But still, this time around is totally different vs. the last crash.
[quote=CA renter]
You do not need NINJA loans in order to create a bubble, IMO. You just need a lot of speculative activity where a critical mass of buyers are buying with the expectation that they will sell at some future date for a higher price. I also believe that there is a LOT more leverage in the housing market than people think. Just because they aren’t using traditional purchase mortgages does NOT mean that these buyers are un-leveraged.
FWIW, many homes in our area are being listed at **above-peak** prices, and many are selling for those amounts. This is a bubble as far as I’m concerned.[/quote]
Absolutely I totally agree CAR. You don’t need NINJA loans to create a bubble but it sure does help! LOL. I do agree some people are speculating but I still say this go around is MUCH different vs. the last crash. Today’s buyers are at least “qualified” for the most part. This is FAR different vs. the last time.
Absolutely I do agree with you that there is more leverage in the market than people think but still, it’s nothing compared to during the bubble no-doc stated income years.
I do think prices can dip again but I agree with SD Realtor that I don’t see them crashing like last time. I actually wouldn’t mind seeing things take a break and slow down which we should see from the increased inventory numbers now.
Also, a big part of the real estate market going up is simple the “wealth effect” because people feel wealthier from their stock portfolios going back up. Most people I know right now feel really good with their portfolios having fully recovered for the most part. People just feel richer.
The market can’t keep going up at this pace forever. The Fed has done a number to force people into the stock market. Personally, I’ll be ready to short sell the market again if it continues going up the rest of this year I’ll be ready to short-sell the market again by Thanksgiving.
