KB Homes drops prices 30% in French Valley

[Anonymous]

How far will home prices drop? ’02 levels? ’01 levels?

Nah. When all is said and done, during the upcoming depression, as happened in the ’30s, prices will drop to 20% of peak levels. That’s what happened to both stock prices and real estate in the ’30s. And, it’s going to happen again in this ugly, ugly downturn.

[Anonymous]

How far will home prices drop? ’02 levels? ’01 levels?

Nah. When all is said and done, during the upcoming depression, as happened in the ’30s, prices will drop to 20% of peak levels. That’s what happened to both stock prices and real estate in the ’30s. And, it’s going to happen again in this ugly, ugly downturn.

[FormerOwner]

jg,

I think that’s probably a worst case scenario but I wouldn’t discount it. I’ve studied the Great Depression to some extent and I find a lot of parallels between the roaring 20’s and the roaring 90’s. We’ll just have to wait and see.

One thing that people don’t talk about a lot is oil prices. If we have any sort of oil price shock that would REALLY spook the housing market at the worst possible time. That could be the “trigger” for a sharp drop off in spending that would cripple the global economy.

[FormerOwner]

jg,

I think that’s probably a worst case scenario but I wouldn’t discount it. I’ve studied the Great Depression to some extent and I find a lot of parallels between the roaring 20’s and the roaring 90’s. We’ll just have to wait and see.

One thing that people don’t talk about a lot is oil prices. If we have any sort of oil price shock that would REALLY spook the housing market at the worst possible time. That could be the “trigger” for a sharp drop off in spending that would cripple the global economy.

[newguy]

no problem hawk.

While you’d expect French Valley to drop a lot, you’d be surprised about Harveston (which my opinion would command a higher premium than French Valley for the location). But I’m going to have to hold off telling you guys until some “stuff” happens =)

But I’ll definitely keep you guys posted.

[newguy]

no problem hawk.

While you’d expect French Valley to drop a lot, you’d be surprised about Harveston (which my opinion would command a higher premium than French Valley for the location). But I’m going to have to hold off telling you guys until some “stuff” happens =)

But I’ll definitely keep you guys posted.

[4plexowner]

I’m expecting 1998 prices across the board – all areas of town, all property types

this will erase the current bubble

any overshoot takes us lower – potentially much lower

~

20% of peak value means the 3/1 in Clairemont is worth $100K or less (they were $500K’ish in mid-2005)

hard to imagine that happening unless most people, investors included, decide that real estate is a dead asset category – ie, the attitude of “I wouldn’t buy real estate if you paid me”

I guess another thing that could cause a drop to 20% of peak values is if banks stop lending on real estate or make the terms to borrow so onerous that the only people buying real estate are the ones who can pay cash – how much real estate would you buy if the interest rate was 18% and the bank wanted 30% down?

~

I’m expecting the 3/1 in Clairemont to go for $225-275K (today’s dollars) at the market bottom

That is 45-55% off peak values and puts the house at a price where investors will be interested

[4plexowner]

I’m expecting 1998 prices across the board – all areas of town, all property types

this will erase the current bubble

any overshoot takes us lower – potentially much lower

~

20% of peak value means the 3/1 in Clairemont is worth $100K or less (they were $500K’ish in mid-2005)

hard to imagine that happening unless most people, investors included, decide that real estate is a dead asset category – ie, the attitude of “I wouldn’t buy real estate if you paid me”

I guess another thing that could cause a drop to 20% of peak values is if banks stop lending on real estate or make the terms to borrow so onerous that the only people buying real estate are the ones who can pay cash – how much real estate would you buy if the interest rate was 18% and the bank wanted 30% down?

~

I’m expecting the 3/1 in Clairemont to go for $225-275K (today’s dollars) at the market bottom

That is 45-55% off peak values and puts the house at a price where investors will be interested

[latesummer2008]

40 – 50% off Peak Prices… FAST and FURIOUS, not a long protracted decline, like most think. Once we get going, people with the most to lose, will panic, as paper profit evaporate rapidly.

Downside is always deeper than the Upside…

http://westsideremeltdown.blogspot.com

[latesummer2008]

40 – 50% off Peak Prices… FAST and FURIOUS, not a long protracted decline, like most think. Once we get going, people with the most to lose, will panic, as paper profit evaporate rapidly.

Downside is always deeper than the Upside…

http://westsideremeltdown.blogspot.com

[23109VC]

KB sucks. like matt says – EVERYTHING is an option.

they advertise a low low price to get you interested, and then when you look closer – the friggin doorknobs are an option….

[23109VC]

KB sucks. like matt says – EVERYTHING is an option.

they advertise a low low price to get you interested, and then when you look closer – the friggin doorknobs are an option….

[an]

KB sucks. like matt says – EVERYTHING is an option.

they advertise a low low price to get you interested, and then when you look closer – the friggin doorknobs are an option….
But that same door knobs were an option before and after this price slash, so I don’t see how that makes any difference.

[an]

KB sucks. like matt says – EVERYTHING is an option.

they advertise a low low price to get you interested, and then when you look closer – the friggin doorknobs are an option….
But that same door knobs were an option before and after this price slash, so I don’t see how that makes any difference.

[newguy]

Asianautica

It took me twice to fully understand what you meant. While the door handles are an option before and after the price slash, there are some options that you have to get. So while the 453K is the base price of their 3500 sf home, KB homes are not building homes with no options. Instead, they only have homes with granite table tops etc making their price now 499K. So in a way, it’s misleading.

And 23109VC is right about the options. When you enter the model homes, there’s a list on the right of the entry listing all of the options…and that list is long. I saw the standard options, and there’s nothing to be going crazy about. I would have no idea how you would be able to imagine all of their options etc etc and settle on what you would eventually want.

[Author]

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