- This topic has 41 replies, 19 voices, and was last updated 17 years, 8 months ago by PerryChase.
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March 3, 2007 at 11:01 PM #8513March 3, 2007 at 11:33 PM #46827SD RealtorParticipant
I am sorry but I do not agree.
I do feel that yes we are in a secular downtrend. However I am seeing active to pending ratios that are better then they have been for most all of 2006. I feel our secular trend will occur over a few years and we will have cyclical rallies in the long trend. I also believe condos are going to continue to get hit hard and lower income neighborhoods where most buyers are in need of subprime financial vehicles will also suffer more then other neighborhoods.
Don’t get me wrong as I am a buyer looking for a home. I feel that the profiles of buyers is alot different then it used to be. We have seen the exit of speculators, and now we will see the exit of buyers who should not be in the market.
Also note that in many many neighborhoods prices already have declined to 2003/2004 levels based on zip code and housing type.
As always I could very well be wrong.
I guess not many people are recalling the 25000 home inventory level we were all talking about last year. I am not saying it will not happen. I am saying it will not happen this year. Maybe in 2008.
While my posting is speculative, the number of homes for sale in San Diego county is at 15.8k and my previous post shows active/pending ratios for some zip codes.
I think it will be a slow simmer rather then a fast meltdown.
SD Realtor
March 3, 2007 at 11:39 PM #46828cashmanParticipantBrother, I hope you are right, but I’m not seeing it here in the Diamond Bar area. There are new townhomes here for sale that are selling from $550 to $750K, and sales are brisk. They are total pieces of crap, and I just don’t understand it. I am currently renting a home that the owner listed for $1.1M. Every other day it has a showing. Driving me nuts! There are definitely buyers out there, fools as they may be. Prices here have not eroded hardly at all since the so called peak in late ’05. It frustrates the hell out of me. It doesn’t seem to be an isolated phenomenon here. I’m seeing the same stickiness of prices in Irvine, North O.C., and most of the San Gabriel Valley. I think money is still too easy to get. Despite what we’re reading about the sub-prime mess, I still hear ads on the radio for loans for people with bad credit. I checked out Craigslist and there are several houses listed with no money down, no credit needed offers, just in my area alone. And the prices are still sky high. I don’t see a significant drop on the horizon unless the traffic of potential buyers dries up. And that’s just not happening now.
March 4, 2007 at 12:17 AM #46830kev374ParticipantThe sales have definitely caught up again but this is expected. This is the last phase of idiot buyers who think the correction has happened and it’s now time to get back into the market. These are the people who have succumbed to the Realtors pitch. However, the tsunami of foreclosures are on the horizon so this minor uptick in activity is soon going to be washed away.
I mean how incredibly stupid do you have to be to believe that a 5 year 120% price runup is corrected with a 1 year 5% depreciation? It has not been clearer in the news that this frenzy has been fueled by exotic lending, subprime lending and speculative madness, anyone who knowingly buys in this market is downright foolish and will pay dearly.
March 4, 2007 at 12:50 AM #46832SD RealtorParticipantAgain, I am not arguing that the market is in decline, nor am I encouraging anyone to buy. People buy for many different reasons. I would also 100% agree that the easy money is very much responsible for the insane runup. I just think things will happen in a more drawn out manner and I feel it will vary with region and housing type as the market weeds out people who should have never been there in the first place.
March 4, 2007 at 7:03 AM #46843BugsParticipantI agree – It’s going to take a while before the big spenders burn off all their other assets and have to face foreclosure on the house. All the action happens on the margins, but the margins still aren’t yet big enough to cause those kinds of losses.
If it unwinds another 10-12% this year that will be a lot.
March 4, 2007 at 7:21 AM #46845mixxalotParticipantThe Fed is starting to crack down on toxic loans and it will be a downward trend but like the dead cat bounce it will take several years to play out. I have decided to grab the popcorn and wait out on the sidelines.
March 4, 2007 at 10:36 AM #46862kev374Participantthe thing is that we cannot say for sure if it will be drawn out because the factors that caused the runup of this magnitude are first time in history on a scale like this. Remember that a bulk of buyers between 2003 and 2006 have been some type of exotic mortgage with little or no downpayment, this applies to both prime and subprime. Just because of costs hardly anyone after 2003 could afford a traditional mortgage. When these 2yr, 3yr and 5yr terms reset it’s just like a plug being pulled off and the seller has no other choice but to foreclose – no refinancing since it will be impossible for him to qualify against traditional guidelines, no selling because he cannot carry costs for 6 months on the market.
My hunch is that in 3 years there will be dramatic market changes and I wouldn’t consider that drawn out π
Of course I could be wrong and we could also have another “15% in the bag” π
One thing that amazes me is the shortsightedness of the Realt Estate industry. They should be wishing for the correction more than anyone because if the correction doesn’t happen we are going to be in a flat market and that doesn’t benefit ANYONE, buyers cannot become homeowners, sellers can’t move on and RE professionals don’t make any money. Only if prices correct sharply will they start going back up again…it’s all cyclic.
March 4, 2007 at 12:10 PM #46865LA_RenterParticipantKeep your eye on the stock market and listen for the “R” word. Right now many people still feel safe to make a home purchase even with these idiotic fundamentals. Currently there are many rumblings on Wall Street about the impact of the subprime meltdown on the US Economy. I think most people on this board know there are alot of bad loans out there right now. IF we see a major stock market correction and the mainstream media picks up the “we are going into recession” narrative, with the spotlight being on the mortgage industry, I have a feeling that will sideline alot of people considering a home purchase. This is the moment I have been waiting to see and in all honesty I have know idea what to expect.
March 4, 2007 at 12:32 PM #46867hipmattParticipantThis is just the beginning. Don’t be fooled thinking that the crash is over. There are too many people who have to sell thi s year. Home supply will be high. Sub prime is fading away. Think of all of the RE agents, lenders, construction, landscapers, and related jobs that have or will be lost due to the end of the housing buildup. People are already loosing jobs. Recession possibilities are in the news.
The dollar is loosing value to foreign currencies. Rents are still less than half the cost of buying w/ 20% down and fixed 30year. Home prices are still way above historical relationships with wages. I know a few people who tell me that they need to sell their McMansions this year and that they would be lucky to just break even. There is just not enough people with the adequate incomes to continue to buy homes at these prices. Thats the bottom line. This will take years, not months, but by the holidays, you will see how much hurt many of these home owners are in. Be smart, not emotional.March 4, 2007 at 12:41 PM #46869daveljParticipantI think we’ll see an 8%-10% decline in the median price/sq. ft. here in SD this year. The marginal buyers from the last three years are gone. These buyers were the speculators and the people who bought with little/no money down, stated income, and used ARMs. Most of these people will no longer qualify for loans under the tighter credit standards, thereby knocking out a huge portion of first-time buyers (maybe half?), which reverberates up the transaction chain. Now the people trying to sell their $500K house have half as many potential buyers so they will have a hard time moving up to the $750K house and so on.
I just looked at the community where I used to own (sold in early 2004 – too early, doh!) and there are two properties for sale. One is for sale at $319K, the second at 399K. (These units peaked out at $410K in summer ’05 and the most recent sales were in the $330Ks.) They are virtually identical condos – exact same size and layout. The difference in price is due to the fact that the owners of the first home bought in 1998 for $120K (and have a big built-in gain), the owners of the second home bought in 2004 for $389K, so the latter owners MUST sell for well over $389K or they’re going to lose money. I think that there are A LOT of people in this situation and they won’t budge until they’re forced to – they’ll hang in as long as they can which keeps the market from tanking in the short run. The problem is, of course, that your house doesn’t know or care that you own it, nor does the housing market…
Also, obviously, inventory is much higher than it appears due to all the builder units that don’t show up in the MLS. Yes, this year is going to be a doozy… and next year as well…
March 4, 2007 at 1:03 PM #46871AnonymousGuestDoes anyone have any “guesstimates” on real estate prices in Pacific Beach for the next few years? Will it experience the same possible percentage price drops as other parts of the county? Sitting on cash seems to be the right thing to do for now. Thanks for all the posts, they are all very informative.
March 4, 2007 at 1:06 PM #46873DuckParticipantIn my North County area (South Carlsbad, Encinitas) the market is getting much better for sellers. Not sure why but there’s been more activity in the last month than in the prior 3 months. One item to note is that the new home construction boom in the area is now just about over. This same thing happened in 2002 after La Costa Valley was built out. Prices went nuts for 2 years and then La Costa Oaks startd construction on about 1,000 homes. Those are now just about all sold so the inventory has been greatly reduced although the MLS might not show it because very few of those new homes ever made it on there. There will not be any major new developments in the area (San Elijo Hills is a different school district) so I think prices will not fall too much further if at all.
March 4, 2007 at 4:51 PM #46883sdrealtorParticipantQuack! I live in the same area and fully expect prices to fall at least another $100,000 in the areas you described within the next 12- 24 months. And I might add, I havent been wrong about the direction of prices or the magnitude of the change in the last 5 years. Quack!
The market is only getting better in those areas because sellers are allowing the prices to float with the market (downward) and agents that formerly had huge market share and tried to keep prices up failed miserably. Many sellers wised up and are now using agents that understand how to get things done!
March 4, 2007 at 7:22 PM #46893mixxalotParticipantI will buy a place in San Diego when the prices are 250k for a 3 bedroom 2 bath home. We have a long ways to go!
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