Housing Tracker update – prices about to go over the cliff in San Diego

[gdcox]

I looked at this link and the first thing that shouts is not the headline figure but the split by percentile.

The 75th percentile and above is stable to even rising. The 25th and below is falling the fastest .

To the extent you can rely on these figures (and there is no mix adjustment here etc), this is evidence is against those who argue that the upmarket areas will follow the cheap areas .
Any comments on this crude conclusion?

[EconProf]

Gandalf, you are quite right that overleveraging combined with a looming deep recession will interact to worsen the price collapse.
In past bubbles, going back centuries, it was a mass hysteria combined with credit innovations and “gearing”–what we would call leverage–that combined to run up prices of tulips, stocks, or land, etc.
What made this housing bubble to so overextend itself beyond normal realities of price/rent and price/income ratios was the new, higher leverage possibilities inherent in 5% down, then 3% down, then no down financing. For a while, there was less $ outlay to buy a starter house than to come up with 1 months rent + security deposit. The temptation was too great for many lower income folks, and the eventual collapse became inevitable.
Here is where this over-leveraging at the low end may be relevant to the divergence we are seeing among property price categories. Could it be that the lower leverage in the upper price categories will protect them, especially when combined with the greater income inequality trends we’ve seen in the past few decades? If so, that would make for the richer neighborhoods not falling as far as the others.

[EconProf]

Gandalf, you are quite right that overleveraging combined with a looming deep recession will interact to worsen the price collapse.
In past bubbles, going back centuries, it was a mass hysteria combined with credit innovations and “gearing”–what we would call leverage–that combined to run up prices of tulips, stocks, or land, etc.
What made this housing bubble to so overextend itself beyond normal realities of price/rent and price/income ratios was the new, higher leverage possibilities inherent in 5% down, then 3% down, then no down financing. For a while, there was less $ outlay to buy a starter house than to come up with 1 months rent + security deposit. The temptation was too great for many lower income folks, and the eventual collapse became inevitable.
Here is where this over-leveraging at the low end may be relevant to the divergence we are seeing among property price categories. Could it be that the lower leverage in the upper price categories will protect them, especially when combined with the greater income inequality trends we’ve seen in the past few decades? If so, that would make for the richer neighborhoods not falling as far as the others.

[EconProf]

Gandalf, you are quite right that overleveraging combined with a looming deep recession will interact to worsen the price collapse.
In past bubbles, going back centuries, it was a mass hysteria combined with credit innovations and “gearing”–what we would call leverage–that combined to run up prices of tulips, stocks, or land, etc.
What made this housing bubble to so overextend itself beyond normal realities of price/rent and price/income ratios was the new, higher leverage possibilities inherent in 5% down, then 3% down, then no down financing. For a while, there was less $ outlay to buy a starter house than to come up with 1 months rent + security deposit. The temptation was too great for many lower income folks, and the eventual collapse became inevitable.
Here is where this over-leveraging at the low end may be relevant to the divergence we are seeing among property price categories. Could it be that the lower leverage in the upper price categories will protect them, especially when combined with the greater income inequality trends we’ve seen in the past few decades? If so, that would make for the richer neighborhoods not falling as far as the others.

[EconProf]

Gandalf, you are quite right that overleveraging combined with a looming deep recession will interact to worsen the price collapse.
In past bubbles, going back centuries, it was a mass hysteria combined with credit innovations and “gearing”–what we would call leverage–that combined to run up prices of tulips, stocks, or land, etc.
What made this housing bubble to so overextend itself beyond normal realities of price/rent and price/income ratios was the new, higher leverage possibilities inherent in 5% down, then 3% down, then no down financing. For a while, there was less $ outlay to buy a starter house than to come up with 1 months rent + security deposit. The temptation was too great for many lower income folks, and the eventual collapse became inevitable.
Here is where this over-leveraging at the low end may be relevant to the divergence we are seeing among property price categories. Could it be that the lower leverage in the upper price categories will protect them, especially when combined with the greater income inequality trends we’ve seen in the past few decades? If so, that would make for the richer neighborhoods not falling as far as the others.

[EconProf]

Gandalf, you are quite right that overleveraging combined with a looming deep recession will interact to worsen the price collapse.
In past bubbles, going back centuries, it was a mass hysteria combined with credit innovations and “gearing”–what we would call leverage–that combined to run up prices of tulips, stocks, or land, etc.
What made this housing bubble to so overextend itself beyond normal realities of price/rent and price/income ratios was the new, higher leverage possibilities inherent in 5% down, then 3% down, then no down financing. For a while, there was less $ outlay to buy a starter house than to come up with 1 months rent + security deposit. The temptation was too great for many lower income folks, and the eventual collapse became inevitable.
Here is where this over-leveraging at the low end may be relevant to the divergence we are seeing among property price categories. Could it be that the lower leverage in the upper price categories will protect them, especially when combined with the greater income inequality trends we’ve seen in the past few decades? If so, that would make for the richer neighborhoods not falling as far as the others.

[34f3f3f]

But at what point did (will) yesterday’s 75th percentile become today’s 50th percentile? Are individual prices being charted?

[34f3f3f]

But at what point did (will) yesterday’s 75th percentile become today’s 50th percentile? Are individual prices being charted?

[34f3f3f]

But at what point did (will) yesterday’s 75th percentile become today’s 50th percentile? Are individual prices being charted?

[34f3f3f]

But at what point did (will) yesterday’s 75th percentile become today’s 50th percentile? Are individual prices being charted?

[34f3f3f]

But at what point did (will) yesterday’s 75th percentile become today’s 50th percentile? Are individual prices being charted?

[gdcox]

Good point Querty, hence need CS.
EconProf. What I find really curious is how and why prices in places like Texas did not explode in line with SD and hence are stable now. In fact Texas is cheap. Compare say SD with San Antonio: quite similar except for the coast and industries. The same financial infrastructure with al its imperfections were as much in place there as in SD or any other of the blow-out locations. Does Texas have recource mortgages by any chance?

[gdcox]

Good point Querty, hence need CS.
EconProf. What I find really curious is how and why prices in places like Texas did not explode in line with SD and hence are stable now. In fact Texas is cheap. Compare say SD with San Antonio: quite similar except for the coast and industries. The same financial infrastructure with al its imperfections were as much in place there as in SD or any other of the blow-out locations. Does Texas have recource mortgages by any chance?

[gdcox]

Good point Querty, hence need CS.
EconProf. What I find really curious is how and why prices in places like Texas did not explode in line with SD and hence are stable now. In fact Texas is cheap. Compare say SD with San Antonio: quite similar except for the coast and industries. The same financial infrastructure with al its imperfections were as much in place there as in SD or any other of the blow-out locations. Does Texas have recource mortgages by any chance?

[gdcox]

Good point Querty, hence need CS.
EconProf. What I find really curious is how and why prices in places like Texas did not explode in line with SD and hence are stable now. In fact Texas is cheap. Compare say SD with San Antonio: quite similar except for the coast and industries. The same financial infrastructure with al its imperfections were as much in place there as in SD or any other of the blow-out locations. Does Texas have recource mortgages by any chance?

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