Orange County and San Diego flagged as “fairly valued”

[Doofrat]

So the mortgage salesman says it’s a good time to buy based on house prices, Income, and population density? Is that what I’m reading here?

[one_muggle]

I wouldn’t discount these guys out of hand.
These Global Insights reports have been pretty spot-on, at least for the last 6 years that I have been reading them. I am not saying that you should go buy a house because of their report, but before you go attacking the messenger, you should at least consider their analysis.
Up through 2001 they had LA county as slightly undervalued, which I found hard to believe at the time, but it seems right in retrospect.
By 2003 LA county was considered overvalued, and by 2004 it was grossly overvalued (>36%).
They state up front that their over/under valuations are not predictions of future housing prices, but consider overvalued areas to have positive price pressure, and vice-versa. Given the rapid housing price drop, their models might be overcompensating–they are based on several decades of inputs. A rapid disruption is likely to cause short-term ringing.
Also, in the description of their analysis (at least back when I last read it in detail in ~2003) they do not predict future economics either, rather they look at how current prices compare with current economic conditions–but they do take into account historic economic relationships since price to rent ratios are very different from region to region, as is mortgage-to-income.

It it likely that SD will get an “undervalued” rating on this report sometime in the next couple years.

Anyway, I would take this as one more data point, but I think accusing them of being biased a bit unfair, given that they had most metro areas rated as overvalued for much if the last couple years.

[one_muggle]

I wouldn’t discount these guys out of hand.
These Global Insights reports have been pretty spot-on, at least for the last 6 years that I have been reading them. I am not saying that you should go buy a house because of their report, but before you go attacking the messenger, you should at least consider their analysis.
Up through 2001 they had LA county as slightly undervalued, which I found hard to believe at the time, but it seems right in retrospect.
By 2003 LA county was considered overvalued, and by 2004 it was grossly overvalued (>36%).
They state up front that their over/under valuations are not predictions of future housing prices, but consider overvalued areas to have positive price pressure, and vice-versa. Given the rapid housing price drop, their models might be overcompensating–they are based on several decades of inputs. A rapid disruption is likely to cause short-term ringing.
Also, in the description of their analysis (at least back when I last read it in detail in ~2003) they do not predict future economics either, rather they look at how current prices compare with current economic conditions–but they do take into account historic economic relationships since price to rent ratios are very different from region to region, as is mortgage-to-income.

It it likely that SD will get an “undervalued” rating on this report sometime in the next couple years.

Anyway, I would take this as one more data point, but I think accusing them of being biased a bit unfair, given that they had most metro areas rated as overvalued for much if the last couple years.

[one_muggle]

I wouldn’t discount these guys out of hand.
These Global Insights reports have been pretty spot-on, at least for the last 6 years that I have been reading them. I am not saying that you should go buy a house because of their report, but before you go attacking the messenger, you should at least consider their analysis.
Up through 2001 they had LA county as slightly undervalued, which I found hard to believe at the time, but it seems right in retrospect.
By 2003 LA county was considered overvalued, and by 2004 it was grossly overvalued (>36%).
They state up front that their over/under valuations are not predictions of future housing prices, but consider overvalued areas to have positive price pressure, and vice-versa. Given the rapid housing price drop, their models might be overcompensating–they are based on several decades of inputs. A rapid disruption is likely to cause short-term ringing.
Also, in the description of their analysis (at least back when I last read it in detail in ~2003) they do not predict future economics either, rather they look at how current prices compare with current economic conditions–but they do take into account historic economic relationships since price to rent ratios are very different from region to region, as is mortgage-to-income.

It it likely that SD will get an “undervalued” rating on this report sometime in the next couple years.

Anyway, I would take this as one more data point, but I think accusing them of being biased a bit unfair, given that they had most metro areas rated as overvalued for much if the last couple years.

[one_muggle]

I wouldn’t discount these guys out of hand.
These Global Insights reports have been pretty spot-on, at least for the last 6 years that I have been reading them. I am not saying that you should go buy a house because of their report, but before you go attacking the messenger, you should at least consider their analysis.
Up through 2001 they had LA county as slightly undervalued, which I found hard to believe at the time, but it seems right in retrospect.
By 2003 LA county was considered overvalued, and by 2004 it was grossly overvalued (>36%).
They state up front that their over/under valuations are not predictions of future housing prices, but consider overvalued areas to have positive price pressure, and vice-versa. Given the rapid housing price drop, their models might be overcompensating–they are based on several decades of inputs. A rapid disruption is likely to cause short-term ringing.
Also, in the description of their analysis (at least back when I last read it in detail in ~2003) they do not predict future economics either, rather they look at how current prices compare with current economic conditions–but they do take into account historic economic relationships since price to rent ratios are very different from region to region, as is mortgage-to-income.

It it likely that SD will get an “undervalued” rating on this report sometime in the next couple years.

Anyway, I would take this as one more data point, but I think accusing them of being biased a bit unfair, given that they had most metro areas rated as overvalued for much if the last couple years.

[one_muggle]

I wouldn’t discount these guys out of hand.
These Global Insights reports have been pretty spot-on, at least for the last 6 years that I have been reading them. I am not saying that you should go buy a house because of their report, but before you go attacking the messenger, you should at least consider their analysis.
Up through 2001 they had LA county as slightly undervalued, which I found hard to believe at the time, but it seems right in retrospect.
By 2003 LA county was considered overvalued, and by 2004 it was grossly overvalued (>36%).
They state up front that their over/under valuations are not predictions of future housing prices, but consider overvalued areas to have positive price pressure, and vice-versa. Given the rapid housing price drop, their models might be overcompensating–they are based on several decades of inputs. A rapid disruption is likely to cause short-term ringing.
Also, in the description of their analysis (at least back when I last read it in detail in ~2003) they do not predict future economics either, rather they look at how current prices compare with current economic conditions–but they do take into account historic economic relationships since price to rent ratios are very different from region to region, as is mortgage-to-income.

It it likely that SD will get an “undervalued” rating on this report sometime in the next couple years.

Anyway, I would take this as one more data point, but I think accusing them of being biased a bit unfair, given that they had most metro areas rated as overvalued for much if the last couple years.

[asragov]

1998Q1 San Diego was listed as being 27% undervalued and 2005Q3 as being 37% overvalued.

Clearly, these things overshoot in either direction.

[asragov]

1998Q1 San Diego was listed as being 27% undervalued and 2005Q3 as being 37% overvalued.

Clearly, these things overshoot in either direction.

[asragov]

1998Q1 San Diego was listed as being 27% undervalued and 2005Q3 as being 37% overvalued.

Clearly, these things overshoot in either direction.

[asragov]

1998Q1 San Diego was listed as being 27% undervalued and 2005Q3 as being 37% overvalued.

Clearly, these things overshoot in either direction.

[asragov]

1998Q1 San Diego was listed as being 27% undervalued and 2005Q3 as being 37% overvalued.

Clearly, these things overshoot in either direction.

[Bugs]

There’s a reason Rich’s trendline analyses start back in 1976 and why they’re tied to the historical trends for wages and population as well as the prices themselves. The problem with looking at the pricing and including the recent spike is that it requires assuming that spike was a typical variation rather than a one-time gross distortion.

That’s why it skews the “should-be” indicator up a lot farther than it should. If the current pricing is within 1% of what it should be, that means that after excluding the $1,000,000+ luxury condos with the waterfront and penthouse locations, the average sales price of $328,000 for all remaining condos countywide is justified. The reality is that with a 5% downpayment it still takes a $102,000 household income to support that average, and that’s about $30,000/year higher than where wages really are.

[Bugs]

There’s a reason Rich’s trendline analyses start back in 1976 and why they’re tied to the historical trends for wages and population as well as the prices themselves. The problem with looking at the pricing and including the recent spike is that it requires assuming that spike was a typical variation rather than a one-time gross distortion.

That’s why it skews the “should-be” indicator up a lot farther than it should. If the current pricing is within 1% of what it should be, that means that after excluding the $1,000,000+ luxury condos with the waterfront and penthouse locations, the average sales price of $328,000 for all remaining condos countywide is justified. The reality is that with a 5% downpayment it still takes a $102,000 household income to support that average, and that’s about $30,000/year higher than where wages really are.

[Bugs]

There’s a reason Rich’s trendline analyses start back in 1976 and why they’re tied to the historical trends for wages and population as well as the prices themselves. The problem with looking at the pricing and including the recent spike is that it requires assuming that spike was a typical variation rather than a one-time gross distortion.

That’s why it skews the “should-be” indicator up a lot farther than it should. If the current pricing is within 1% of what it should be, that means that after excluding the $1,000,000+ luxury condos with the waterfront and penthouse locations, the average sales price of $328,000 for all remaining condos countywide is justified. The reality is that with a 5% downpayment it still takes a $102,000 household income to support that average, and that’s about $30,000/year higher than where wages really are.

[Bugs]

There’s a reason Rich’s trendline analyses start back in 1976 and why they’re tied to the historical trends for wages and population as well as the prices themselves. The problem with looking at the pricing and including the recent spike is that it requires assuming that spike was a typical variation rather than a one-time gross distortion.

That’s why it skews the “should-be” indicator up a lot farther than it should. If the current pricing is within 1% of what it should be, that means that after excluding the $1,000,000+ luxury condos with the waterfront and penthouse locations, the average sales price of $328,000 for all remaining condos countywide is justified. The reality is that with a 5% downpayment it still takes a $102,000 household income to support that average, and that’s about $30,000/year higher than where wages really are.

[Author]

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