California homes are about 35% to 40% overvalued

[The OC Scam]

Todays report from Marketwatch

“Prices could fall much further. In a separate report, analysts at Goldman Sachs figured that prices in California are about 35% to 40% overvalued, compared with past relationships between home prices and income growth. The median sales price of a home in California was $589,000 in August, Goldman said, but should be around $375,000, they said.”

It is nice to start to see the world is waking up and actually looking at income versus the median price.

http://www.marketwatch.com/news/story/home-prices-falling-record-pace/story.aspx?guid=%7B2B900433%2DB173%2D4881%2D8B2D%2D71403EFAE2B3%7D&dist=MostReadHome

[golfproz]

$375k is still too high. The CA median price in 2000 was $211k add 3% or 4% per year for “normal” appreciation and you’re well short of $375. If you use 3% it’s around $260k and 4% is around $280k. In 2001 the median was 240K and at 3% that’s still only $290k. The state median should be in the mid to high 200s!

[golfproz]

$375k is still too high. The CA median price in 2000 was $211k add 3% or 4% per year for “normal” appreciation and you’re well short of $375. If you use 3% it’s around $260k and 4% is around $280k. In 2001 the median was 240K and at 3% that’s still only $290k. The state median should be in the mid to high 200s!

[golfproz]

$375k is still too high. The CA median price in 2000 was $211k add 3% or 4% per year for “normal” appreciation and you’re well short of $375. If you use 3% it’s around $260k and 4% is around $280k. In 2001 the median was 240K and at 3% that’s still only $290k. The state median should be in the mid to high 200s!

[one_muggle]

If you look at the report from Global Insights, CA was actually undervalued (compared to historical norms) through 2001 or 2002, so 2000 numbers are technically low. Though, even they do not claim that prices will drop any particular amount, they report the overvaluation as a stress on the market, rather than a target price. With gross overvaluation (>35%) the chances of the median dropping below the trend line during a crash, increases–so you might still get to see your <$300k. Probably depends on the level of spillover into the general economy, thus feeding the vicious cycle. -one muggle

[one_muggle]

If you look at the report from Global Insights, CA was actually undervalued (compared to historical norms) through 2001 or 2002, so 2000 numbers are technically low. Though, even they do not claim that prices will drop any particular amount, they report the overvaluation as a stress on the market, rather than a target price. With gross overvaluation (>35%) the chances of the median dropping below the trend line during a crash, increases–so you might still get to see your <$300k. Probably depends on the level of spillover into the general economy, thus feeding the vicious cycle. -one muggle

[one_muggle]

If you look at the report from Global Insights, CA was actually undervalued (compared to historical norms) through 2001 or 2002, so 2000 numbers are technically low. Though, even they do not claim that prices will drop any particular amount, they report the overvaluation as a stress on the market, rather than a target price. With gross overvaluation (>35%) the chances of the median dropping below the trend line during a crash, increases–so you might still get to see your <$300k. Probably depends on the level of spillover into the general economy, thus feeding the vicious cycle. -one muggle

[what_a_disasta]

California homes are about 35% to 40% overvalued

…In other news, the sky is blue and grass is green.

[what_a_disasta]

California homes are about 35% to 40% overvalued

…In other news, the sky is blue and grass is green.

[what_a_disasta]

California homes are about 35% to 40% overvalued

…In other news, the sky is blue and grass is green.

[golfproz]

Undervalued in 2000? If we believe the GS report with a median of $375k that would make the median home 7x the median income. I’m not sure how they as so called economists can make the assumption that this is fiscally a good thing. It seems to me that median homes should be 3x the median income or in line with rents.

[golfproz]

Undervalued in 2000? If we believe the GS report with a median of $375k that would make the median home 7x the median income. I’m not sure how they as so called economists can make the assumption that this is fiscally a good thing. It seems to me that median homes should be 3x the median income or in line with rents.

[golfproz]

Undervalued in 2000? If we believe the GS report with a median of $375k that would make the median home 7x the median income. I’m not sure how they as so called economists can make the assumption that this is fiscally a good thing. It seems to me that median homes should be 3x the median income or in line with rents.

[Alex_angel]

They’ve been saying that about SF Bay area for years yet it still goes up. Like it or not California homes will never be the same price as those in Idaho.

[Alex_angel]

They’ve been saying that about SF Bay area for years yet it still goes up. Like it or not California homes will never be the same price as those in Idaho.

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