Higher End Declines?

[patientrenter]

pfflyer, if you haven’t already done it, you may want to check out Rich’s Dec 26 post “October Case-Shiller Prices”. The picture says as much as anyone here knows, I suspect.

raptorduck, another poster looking for a high-end home, doesn’t appear to be in any rush, so I suspect he sees more downside potential for high-end prices than upside. But I’ll let him speak for himself.

Patient renter in OC

[Nancy_s soothsayer]

Many high-end buyers with large secure salaries played with Option ARMS because they were smug in thinking their “investment” bets were going to pay up big-time. In 2008-2009 they will get their hard lessons and comeuppance. Their recast triggers will bite them in the you-know-what.

[Nancy_s soothsayer]

Many high-end buyers with large secure salaries played with Option ARMS because they were smug in thinking their “investment” bets were going to pay up big-time. In 2008-2009 they will get their hard lessons and comeuppance. Their recast triggers will bite them in the you-know-what.

[Nancy_s soothsayer]

Many high-end buyers with large secure salaries played with Option ARMS because they were smug in thinking their “investment” bets were going to pay up big-time. In 2008-2009 they will get their hard lessons and comeuppance. Their recast triggers will bite them in the you-know-what.

[Nancy_s soothsayer]

Many high-end buyers with large secure salaries played with Option ARMS because they were smug in thinking their “investment” bets were going to pay up big-time. In 2008-2009 they will get their hard lessons and comeuppance. Their recast triggers will bite them in the you-know-what.

[Nancy_s soothsayer]

Many high-end buyers with large secure salaries played with Option ARMS because they were smug in thinking their “investment” bets were going to pay up big-time. In 2008-2009 they will get their hard lessons and comeuppance. Their recast triggers will bite them in the you-know-what.

[Anonymous]

I’m also renting and waiting for the high end to crack. My guess is it will be a steep “catch-up” drop when it happens. Here’s some reasons beyond the obvious, which is that the “trade-up” buyer is gone:

-High end is much more sensitive to option arms. These will recast to full payment over the next two years (for ’05 and later loans). We’re talking 2-3x increases in loan payments that were meant to be “refinanced away” with a new option arm. Many, many OA borrowers will explode.

-High end will be affected by bonus/profits/commissions. Think about all the profits that have been generated from cash-outs the past few years — not only in the real estate sector, but in everything from restaurants to luxury car sales to cosmetic surgery. Lots of high-end owners will be taking a big pay cut (instead of the projected increase).

-Highest end will weigh on high end. The biggest price cuts are occurring in the highest price homes — cut from $15m to $12m and still sitting there. What does that have to do with the $2m range? It “pancakes”: the $12m home falls into the $9m range, forcing the $9m into the $7m, the $7m into the $5, etc. Eventually you get real luxury (a $4m home in 2005) falling into the $2.5m.

[Anonymous]

I’m also renting and waiting for the high end to crack. My guess is it will be a steep “catch-up” drop when it happens. Here’s some reasons beyond the obvious, which is that the “trade-up” buyer is gone:

-High end is much more sensitive to option arms. These will recast to full payment over the next two years (for ’05 and later loans). We’re talking 2-3x increases in loan payments that were meant to be “refinanced away” with a new option arm. Many, many OA borrowers will explode.

-High end will be affected by bonus/profits/commissions. Think about all the profits that have been generated from cash-outs the past few years — not only in the real estate sector, but in everything from restaurants to luxury car sales to cosmetic surgery. Lots of high-end owners will be taking a big pay cut (instead of the projected increase).

-Highest end will weigh on high end. The biggest price cuts are occurring in the highest price homes — cut from $15m to $12m and still sitting there. What does that have to do with the $2m range? It “pancakes”: the $12m home falls into the $9m range, forcing the $9m into the $7m, the $7m into the $5, etc. Eventually you get real luxury (a $4m home in 2005) falling into the $2.5m.

[Anonymous]

I’m also renting and waiting for the high end to crack. My guess is it will be a steep “catch-up” drop when it happens. Here’s some reasons beyond the obvious, which is that the “trade-up” buyer is gone:

-High end is much more sensitive to option arms. These will recast to full payment over the next two years (for ’05 and later loans). We’re talking 2-3x increases in loan payments that were meant to be “refinanced away” with a new option arm. Many, many OA borrowers will explode.

-High end will be affected by bonus/profits/commissions. Think about all the profits that have been generated from cash-outs the past few years — not only in the real estate sector, but in everything from restaurants to luxury car sales to cosmetic surgery. Lots of high-end owners will be taking a big pay cut (instead of the projected increase).

-Highest end will weigh on high end. The biggest price cuts are occurring in the highest price homes — cut from $15m to $12m and still sitting there. What does that have to do with the $2m range? It “pancakes”: the $12m home falls into the $9m range, forcing the $9m into the $7m, the $7m into the $5, etc. Eventually you get real luxury (a $4m home in 2005) falling into the $2.5m.

[Anonymous]

I’m also renting and waiting for the high end to crack. My guess is it will be a steep “catch-up” drop when it happens. Here’s some reasons beyond the obvious, which is that the “trade-up” buyer is gone:

-High end is much more sensitive to option arms. These will recast to full payment over the next two years (for ’05 and later loans). We’re talking 2-3x increases in loan payments that were meant to be “refinanced away” with a new option arm. Many, many OA borrowers will explode.

-High end will be affected by bonus/profits/commissions. Think about all the profits that have been generated from cash-outs the past few years — not only in the real estate sector, but in everything from restaurants to luxury car sales to cosmetic surgery. Lots of high-end owners will be taking a big pay cut (instead of the projected increase).

-Highest end will weigh on high end. The biggest price cuts are occurring in the highest price homes — cut from $15m to $12m and still sitting there. What does that have to do with the $2m range? It “pancakes”: the $12m home falls into the $9m range, forcing the $9m into the $7m, the $7m into the $5, etc. Eventually you get real luxury (a $4m home in 2005) falling into the $2.5m.

[Anonymous]

I’m also renting and waiting for the high end to crack. My guess is it will be a steep “catch-up” drop when it happens. Here’s some reasons beyond the obvious, which is that the “trade-up” buyer is gone:

-High end is much more sensitive to option arms. These will recast to full payment over the next two years (for ’05 and later loans). We’re talking 2-3x increases in loan payments that were meant to be “refinanced away” with a new option arm. Many, many OA borrowers will explode.

-High end will be affected by bonus/profits/commissions. Think about all the profits that have been generated from cash-outs the past few years — not only in the real estate sector, but in everything from restaurants to luxury car sales to cosmetic surgery. Lots of high-end owners will be taking a big pay cut (instead of the projected increase).

-Highest end will weigh on high end. The biggest price cuts are occurring in the highest price homes — cut from $15m to $12m and still sitting there. What does that have to do with the $2m range? It “pancakes”: the $12m home falls into the $9m range, forcing the $9m into the $7m, the $7m into the $5, etc. Eventually you get real luxury (a $4m home in 2005) falling into the $2.5m.

[SD Realtor]

It will be interesting to see how it plays out…

My gut reaction was to write something akin to, why would anyone purchase an option arm on say a 2M home… However my next thought was that the best opportunity for people may be due to greedy real estate professionals who went and plunked down for places with hopes to spin them quickly. I tend to think these will be the first opportunity homes on the high end that hit the market.

Also I wonder if we are thinking about high end homes in a different manner. My thoughts on high end homes are 1.5M or 2M and up. I don’t classify an 800k home as a high end home. Yes I know that is a huge amount of money and I certainly do not mean to devalue or demean a home of that price.

Here is a great example of opportunity or soon to be opportunity. I got a call from a lady a few months back who owns a home up in Carlsbad. She poo pood me and didn’t list because of my sour outlook on the market and my price recommendation. I explained to her it would be a waste of my time to list at her desired price. Anyways she said she was sorry but couldn’t list with me. Well she had no problem getting Prudential to list her home. So I did some more research on her and she has 7 homes, 5 of them bought within the last 3 years… and they are all in the 700-1M range. Nice places, but not high end. She is definitely in denial. While she acknowledges the down market she said most of the realtors she speaks to say it is a simple correction that will pick up again in the spring…

I guess I wandered off topic. I do think that the high end will come down (and has come down already). The next two years should start to erode it and I would assume the speculators on the high end (and it will be interesting to see how many there are) will be the first to go. I also still maintain that it will take more patience for the high end and that high ends will vary in the quality, quantity and amount of depreciation. The “newer” high end homes to me are more prone to the first and more substantial moves.

Just my guess which is not worth much.

What would be interesting to me is to hear what pricing people classify as high end.

SD Realtor

[SD Realtor]

It will be interesting to see how it plays out…

My gut reaction was to write something akin to, why would anyone purchase an option arm on say a 2M home… However my next thought was that the best opportunity for people may be due to greedy real estate professionals who went and plunked down for places with hopes to spin them quickly. I tend to think these will be the first opportunity homes on the high end that hit the market.

Also I wonder if we are thinking about high end homes in a different manner. My thoughts on high end homes are 1.5M or 2M and up. I don’t classify an 800k home as a high end home. Yes I know that is a huge amount of money and I certainly do not mean to devalue or demean a home of that price.

Here is a great example of opportunity or soon to be opportunity. I got a call from a lady a few months back who owns a home up in Carlsbad. She poo pood me and didn’t list because of my sour outlook on the market and my price recommendation. I explained to her it would be a waste of my time to list at her desired price. Anyways she said she was sorry but couldn’t list with me. Well she had no problem getting Prudential to list her home. So I did some more research on her and she has 7 homes, 5 of them bought within the last 3 years… and they are all in the 700-1M range. Nice places, but not high end. She is definitely in denial. While she acknowledges the down market she said most of the realtors she speaks to say it is a simple correction that will pick up again in the spring…

I guess I wandered off topic. I do think that the high end will come down (and has come down already). The next two years should start to erode it and I would assume the speculators on the high end (and it will be interesting to see how many there are) will be the first to go. I also still maintain that it will take more patience for the high end and that high ends will vary in the quality, quantity and amount of depreciation. The “newer” high end homes to me are more prone to the first and more substantial moves.

Just my guess which is not worth much.

What would be interesting to me is to hear what pricing people classify as high end.

SD Realtor

[SD Realtor]

It will be interesting to see how it plays out…

My gut reaction was to write something akin to, why would anyone purchase an option arm on say a 2M home… However my next thought was that the best opportunity for people may be due to greedy real estate professionals who went and plunked down for places with hopes to spin them quickly. I tend to think these will be the first opportunity homes on the high end that hit the market.

Also I wonder if we are thinking about high end homes in a different manner. My thoughts on high end homes are 1.5M or 2M and up. I don’t classify an 800k home as a high end home. Yes I know that is a huge amount of money and I certainly do not mean to devalue or demean a home of that price.

Here is a great example of opportunity or soon to be opportunity. I got a call from a lady a few months back who owns a home up in Carlsbad. She poo pood me and didn’t list because of my sour outlook on the market and my price recommendation. I explained to her it would be a waste of my time to list at her desired price. Anyways she said she was sorry but couldn’t list with me. Well she had no problem getting Prudential to list her home. So I did some more research on her and she has 7 homes, 5 of them bought within the last 3 years… and they are all in the 700-1M range. Nice places, but not high end. She is definitely in denial. While she acknowledges the down market she said most of the realtors she speaks to say it is a simple correction that will pick up again in the spring…

I guess I wandered off topic. I do think that the high end will come down (and has come down already). The next two years should start to erode it and I would assume the speculators on the high end (and it will be interesting to see how many there are) will be the first to go. I also still maintain that it will take more patience for the high end and that high ends will vary in the quality, quantity and amount of depreciation. The “newer” high end homes to me are more prone to the first and more substantial moves.

Just my guess which is not worth much.

What would be interesting to me is to hear what pricing people classify as high end.

SD Realtor

[SD Realtor]

It will be interesting to see how it plays out…

My gut reaction was to write something akin to, why would anyone purchase an option arm on say a 2M home… However my next thought was that the best opportunity for people may be due to greedy real estate professionals who went and plunked down for places with hopes to spin them quickly. I tend to think these will be the first opportunity homes on the high end that hit the market.

Also I wonder if we are thinking about high end homes in a different manner. My thoughts on high end homes are 1.5M or 2M and up. I don’t classify an 800k home as a high end home. Yes I know that is a huge amount of money and I certainly do not mean to devalue or demean a home of that price.

Here is a great example of opportunity or soon to be opportunity. I got a call from a lady a few months back who owns a home up in Carlsbad. She poo pood me and didn’t list because of my sour outlook on the market and my price recommendation. I explained to her it would be a waste of my time to list at her desired price. Anyways she said she was sorry but couldn’t list with me. Well she had no problem getting Prudential to list her home. So I did some more research on her and she has 7 homes, 5 of them bought within the last 3 years… and they are all in the 700-1M range. Nice places, but not high end. She is definitely in denial. While she acknowledges the down market she said most of the realtors she speaks to say it is a simple correction that will pick up again in the spring…

I guess I wandered off topic. I do think that the high end will come down (and has come down already). The next two years should start to erode it and I would assume the speculators on the high end (and it will be interesting to see how many there are) will be the first to go. I also still maintain that it will take more patience for the high end and that high ends will vary in the quality, quantity and amount of depreciation. The “newer” high end homes to me are more prone to the first and more substantial moves.

Just my guess which is not worth much.

What would be interesting to me is to hear what pricing people classify as high end.

SD Realtor

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