How low will it go? Quick survey

[stansd]

Of course higher interest rates will reduce affordability. That’s one of the key reasons we are all talking about 20%-50% reductions in housing prices from current levels.

Income remains a key determinant of affordability, increased interest rates not withstanding. The fundamentals don’t change, but changes in the fundamentals drive changes in values (previous post was in response to the idea that income based analysis was worthless).

Rates (and spreads) on jumbo and subprime loans will be higher than in the past couple years, but these products will remain part of the mortgage landscape the current lack of availability notwithstanding. Rates will go up, home prices will go down, but income (along with interest rate levels) will remain a key determinant of how low they go.

Stan

[JPJones]

Thanks for clarifying your point.

[JPJones]

Thanks for clarifying your point.

[JPJones]

Thanks for clarifying your point.

[temeculaguy]

When this thread first came up I was going to tell you that expecting 50% nominal is too much across the board but there will be specific examples. A day later I read the posts and have to concur with Perry, “When Bugs talks, I listen.” Bugs is not an uberbear and this is not what I would have expected him to say two months ago. I have seen some strange clouds forming lately, have been through storms before but have never seen clouds like this. So I’ll lock in my vote at 30% across the board and 50% examples based on the area, year built and density of toxic mortgages in a given tract. And I think we will see evidence of those 50% drops within 24 months. The reason I think the time frame will be faster than ever before is because of the internet. It has become the primary information source for the buying demographic and it’s too difficult to control. In past downturns, all of the information was controlled by people with a vested interest in the market. The game is different, the rules are different and the results will be different. Of course if I’m wrong I can always blame it on Bugs, Perry and the rest of you.

[temeculaguy]

When this thread first came up I was going to tell you that expecting 50% nominal is too much across the board but there will be specific examples. A day later I read the posts and have to concur with Perry, “When Bugs talks, I listen.” Bugs is not an uberbear and this is not what I would have expected him to say two months ago. I have seen some strange clouds forming lately, have been through storms before but have never seen clouds like this. So I’ll lock in my vote at 30% across the board and 50% examples based on the area, year built and density of toxic mortgages in a given tract. And I think we will see evidence of those 50% drops within 24 months. The reason I think the time frame will be faster than ever before is because of the internet. It has become the primary information source for the buying demographic and it’s too difficult to control. In past downturns, all of the information was controlled by people with a vested interest in the market. The game is different, the rules are different and the results will be different. Of course if I’m wrong I can always blame it on Bugs, Perry and the rest of you.

[temeculaguy]

When this thread first came up I was going to tell you that expecting 50% nominal is too much across the board but there will be specific examples. A day later I read the posts and have to concur with Perry, “When Bugs talks, I listen.” Bugs is not an uberbear and this is not what I would have expected him to say two months ago. I have seen some strange clouds forming lately, have been through storms before but have never seen clouds like this. So I’ll lock in my vote at 30% across the board and 50% examples based on the area, year built and density of toxic mortgages in a given tract. And I think we will see evidence of those 50% drops within 24 months. The reason I think the time frame will be faster than ever before is because of the internet. It has become the primary information source for the buying demographic and it’s too difficult to control. In past downturns, all of the information was controlled by people with a vested interest in the market. The game is different, the rules are different and the results will be different. Of course if I’m wrong I can always blame it on Bugs, Perry and the rest of you.

[sdrealtor]

30% nominally on my house. Which is a nice home in a nice area with a big yard, well landscaped, quiet location and close to everything including great schools. My guess is its down almost 10% already from the absolute peak price I could have gotten. That will bring it down to an early 2003 price possibly a late 2002 price. If it goes down to 2001 levels that would be a 40% drop which I cant see happening.

I dont care about the rest.

[sdrealtor]

30% nominally on my house. Which is a nice home in a nice area with a big yard, well landscaped, quiet location and close to everything including great schools. My guess is its down almost 10% already from the absolute peak price I could have gotten. That will bring it down to an early 2003 price possibly a late 2002 price. If it goes down to 2001 levels that would be a 40% drop which I cant see happening.

I dont care about the rest.

[sdrealtor]

30% nominally on my house. Which is a nice home in a nice area with a big yard, well landscaped, quiet location and close to everything including great schools. My guess is its down almost 10% already from the absolute peak price I could have gotten. That will bring it down to an early 2003 price possibly a late 2002 price. If it goes down to 2001 levels that would be a 40% drop which I cant see happening.

I dont care about the rest.

[bsrsharma]

Stan,

My model is working as I described. When there is no money, motivated sellers drop price to make the deal. See the 5% loss in one go below.

———————————————————

The Chicago Tribune reports from Illinois. “The residential real estate industry is bracing for more complications and the potential for collapsed sales agreements because of global credit crunch fears. Last week, North Side broker Beth Ryan said a seller she represents accepted $25,000 less for his $500,000 house after another offer fell through when the would-be buyer was shut out of a mortgage.”

“‘Their credit score was 580 and, as of last Tuesday, their broker said they could have gotten a loan approved for 3 percent down,’ Ryan said. ‘But then standards tightened and he said no one would touch that deal.’”

“‘If you have [a preapproval] from last week, you can rip that up’ because conditions are changing daily, said mortgage broker Kit Mueller.” ….
——————————————————–

[bsrsharma]

Stan,

My model is working as I described. When there is no money, motivated sellers drop price to make the deal. See the 5% loss in one go below.

———————————————————

The Chicago Tribune reports from Illinois. “The residential real estate industry is bracing for more complications and the potential for collapsed sales agreements because of global credit crunch fears. Last week, North Side broker Beth Ryan said a seller she represents accepted $25,000 less for his $500,000 house after another offer fell through when the would-be buyer was shut out of a mortgage.”

“‘Their credit score was 580 and, as of last Tuesday, their broker said they could have gotten a loan approved for 3 percent down,’ Ryan said. ‘But then standards tightened and he said no one would touch that deal.’”

“‘If you have [a preapproval] from last week, you can rip that up’ because conditions are changing daily, said mortgage broker Kit Mueller.” ….
——————————————————–

[bsrsharma]

Stan,

My model is working as I described. When there is no money, motivated sellers drop price to make the deal. See the 5% loss in one go below.

———————————————————

The Chicago Tribune reports from Illinois. “The residential real estate industry is bracing for more complications and the potential for collapsed sales agreements because of global credit crunch fears. Last week, North Side broker Beth Ryan said a seller she represents accepted $25,000 less for his $500,000 house after another offer fell through when the would-be buyer was shut out of a mortgage.”

“‘Their credit score was 580 and, as of last Tuesday, their broker said they could have gotten a loan approved for 3 percent down,’ Ryan said. ‘But then standards tightened and he said no one would touch that deal.’”

“‘If you have [a preapproval] from last week, you can rip that up’ because conditions are changing daily, said mortgage broker Kit Mueller.” ….
——————————————————–

[JES]

When I look at homes in an area like San Elijo Hills that are currently selling for 700k, my intuition tells me that they will drop to at least 500k during the next two years. My subconscious is comnbining the millions of facts that I have seen on this site and others and weighing the odds of a recession, layoffs, a continued housing crash, and heaven forbid a terrorist strike on this country, rate rises etc. Just as Nostradamus predicted ‘hisler’ and the soon to be revealed antichrist who will rise from the European Union, I am confident in 500k, if for no other reason than the fact that the average person in North County looks at those stucco boxes and says, “700k, are you kidding me! Maybe 500k, but no way I’d pay 700k.”

[JES]

When I look at homes in an area like San Elijo Hills that are currently selling for 700k, my intuition tells me that they will drop to at least 500k during the next two years. My subconscious is comnbining the millions of facts that I have seen on this site and others and weighing the odds of a recession, layoffs, a continued housing crash, and heaven forbid a terrorist strike on this country, rate rises etc. Just as Nostradamus predicted ‘hisler’ and the soon to be revealed antichrist who will rise from the European Union, I am confident in 500k, if for no other reason than the fact that the average person in North County looks at those stucco boxes and says, “700k, are you kidding me! Maybe 500k, but no way I’d pay 700k.”

[Author]

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