One theory on why higher end areas sag slower

[Fearful]

SD Realtor posted some interesting CV transaction data showing that a healthy portion of recent CV transactions have high LTV’s. Thus, large (multi-hundred $K) down payments are being paid. An obvious question is, where is this money coming from?

One answer: House trade-up, that is, equity accumulated from holding prior houses from the beginning of the last boom. Anyone who bought in the late 90’s was, and still is, able to sell and cash out substantial equity.

This phenomenon helps explain why these areas decline slowly; assuming these are trade-up houses, the people are selling lower value houses and extracting the equity. Only as those lower value houses decline sufficiently in value does the equity supporting the higher value house purchases disappear.

Another way of looking at it is time-based: Longer term owners are the ones able to extract sufficient equity to move up. That pool of longer term owners gets eaten up over time, and the move-up market becomes more pressured.

I suppose some portion of the capital for the down payments can come from investments, savings, and the like, but my understanding is that personal capital accumulation is generally not that strong. I doubt that much of the down payments come from sources other than prior real estate gains.

[meadandale]

All the people that I know living in CV bought there with trade up money. One traded up in CV. Bought an early model, it doubled in value and they traded up. Must be nice having a million+ dollar house for the same mortgage that I have.

Of course, the property taxes, mello roos and hoa’s eat you alive….

[meadandale]

All the people that I know living in CV bought there with trade up money. One traded up in CV. Bought an early model, it doubled in value and they traded up. Must be nice having a million+ dollar house for the same mortgage that I have.

Of course, the property taxes, mello roos and hoa’s eat you alive….

[meadandale]

All the people that I know living in CV bought there with trade up money. One traded up in CV. Bought an early model, it doubled in value and they traded up. Must be nice having a million+ dollar house for the same mortgage that I have.

Of course, the property taxes, mello roos and hoa’s eat you alive….

[meadandale]

All the people that I know living in CV bought there with trade up money. One traded up in CV. Bought an early model, it doubled in value and they traded up. Must be nice having a million+ dollar house for the same mortgage that I have.

Of course, the property taxes, mello roos and hoa’s eat you alive….

[meadandale]

All the people that I know living in CV bought there with trade up money. One traded up in CV. Bought an early model, it doubled in value and they traded up. Must be nice having a million+ dollar house for the same mortgage that I have.

Of course, the property taxes, mello roos and hoa’s eat you alive….

[JWM in SD]

You know, I asked the question about what the source of the downpayments was and was roundly criticized by the realtor triad here because according to them, it is irrelevant.

Of course, you and I both know better. It is entirely relevant because it speaks to the sustainability of any bounce that may occur on the way to the bottom in prices.

Here is the multi-part question I posed and never really got an answer and I suspect I know why:

How many of these sideline buyers:

1.Have at least 20% down in Cash that is NOT SOURCED from the following: Prior sale of another house in a bubble zone, actually equity extracted from a house in bubble zone, from Mommy or Daddy.

2.Are first time buyers.

3.Age 35 or younger. In the case of a married couple, both must meet this criteria.

[JWM in SD]

You know, I asked the question about what the source of the downpayments was and was roundly criticized by the realtor triad here because according to them, it is irrelevant.

Of course, you and I both know better. It is entirely relevant because it speaks to the sustainability of any bounce that may occur on the way to the bottom in prices.

Here is the multi-part question I posed and never really got an answer and I suspect I know why:

How many of these sideline buyers:

1.Have at least 20% down in Cash that is NOT SOURCED from the following: Prior sale of another house in a bubble zone, actually equity extracted from a house in bubble zone, from Mommy or Daddy.

2.Are first time buyers.

3.Age 35 or younger. In the case of a married couple, both must meet this criteria.

[JWM in SD]

You know, I asked the question about what the source of the downpayments was and was roundly criticized by the realtor triad here because according to them, it is irrelevant.

Of course, you and I both know better. It is entirely relevant because it speaks to the sustainability of any bounce that may occur on the way to the bottom in prices.

Here is the multi-part question I posed and never really got an answer and I suspect I know why:

How many of these sideline buyers:

1.Have at least 20% down in Cash that is NOT SOURCED from the following: Prior sale of another house in a bubble zone, actually equity extracted from a house in bubble zone, from Mommy or Daddy.

2.Are first time buyers.

3.Age 35 or younger. In the case of a married couple, both must meet this criteria.

[JWM in SD]

You know, I asked the question about what the source of the downpayments was and was roundly criticized by the realtor triad here because according to them, it is irrelevant.

Of course, you and I both know better. It is entirely relevant because it speaks to the sustainability of any bounce that may occur on the way to the bottom in prices.

Here is the multi-part question I posed and never really got an answer and I suspect I know why:

How many of these sideline buyers:

1.Have at least 20% down in Cash that is NOT SOURCED from the following: Prior sale of another house in a bubble zone, actually equity extracted from a house in bubble zone, from Mommy or Daddy.

2.Are first time buyers.

3.Age 35 or younger. In the case of a married couple, both must meet this criteria.

[JWM in SD]

You know, I asked the question about what the source of the downpayments was and was roundly criticized by the realtor triad here because according to them, it is irrelevant.

Of course, you and I both know better. It is entirely relevant because it speaks to the sustainability of any bounce that may occur on the way to the bottom in prices.

Here is the multi-part question I posed and never really got an answer and I suspect I know why:

How many of these sideline buyers:

1.Have at least 20% down in Cash that is NOT SOURCED from the following: Prior sale of another house in a bubble zone, actually equity extracted from a house in bubble zone, from Mommy or Daddy.

2.Are first time buyers.

3.Age 35 or younger. In the case of a married couple, both must meet this criteria.

[an]

You ask a question that no one know the answer to, that’s why you didn’t get an answer JWM. I know I don’t tell my agent where my down payment comes from, just that I have $ for a down payment. The only info anyone know for sure is that there are people out there right now who are buying houses w/ plenty of $ down.

[an]

You ask a question that no one know the answer to, that’s why you didn’t get an answer JWM. I know I don’t tell my agent where my down payment comes from, just that I have $ for a down payment. The only info anyone know for sure is that there are people out there right now who are buying houses w/ plenty of $ down.

[an]

You ask a question that no one know the answer to, that’s why you didn’t get an answer JWM. I know I don’t tell my agent where my down payment comes from, just that I have $ for a down payment. The only info anyone know for sure is that there are people out there right now who are buying houses w/ plenty of $ down.

[an]

You ask a question that no one know the answer to, that’s why you didn’t get an answer JWM. I know I don’t tell my agent where my down payment comes from, just that I have $ for a down payment. The only info anyone know for sure is that there are people out there right now who are buying houses w/ plenty of $ down.

[Author]

Posts