Panic as Rolling Wave or Giant Tsunami

[PD]

Panic may end up being a very important part of the coming downturn. Will it take the form of a rolling wave or a giant tsunami? Make your prediction for San Diego, the nation as a whole, or separate areas (like Florida, Northern Virginia). If you think there will be a giant tsunami, do you have a prediction for when it will start?

[PD]

I think that we are seeing a rolling wave in San Diego right now but that it will morph into a tsunami around Christmas when the recession starts.

[powayseller]

Rolling wave for the nation. Recession will start in Q1 07, unemployment will rise, and the winter selling season will be dismal for those who need to sell. By next summer, psychology will be real bad, buyers’ fear will grow, and by 2009, people will be in panic mode. If you are a seller in 2008 or later, it will seem like the buyers have really disappeared.

I don’t know if the Fed can lower interest rates a lot, start a bunch of government works projects or alternative energy projects to reduce our reliance on overseas oil,, all to raise employment, but without any of that help, I think it’s more like a tsunami.

On a related note, when I hear realtors tell me they have buyes waiting on the sidelines for fall for price drops, I feel real bad for my realtor friends. There is NO way that a buyer who is waiting for price drops, will buy in the fall. Why would a person who is waiting for price drops buy when prices are really starting to drop? Wouldn’t that kind of person wait even longer, to see how much further they will fall?

Most of the buyers out there now are the ones who don’t understand asset bubbles. The rest, a minority, know prices can drop but don’t care. I presume they don’t care because they have NO idea how far they can go down.

[powayseller]

duplicate (server slow …)

[pencilneck]

Your question reminded me of today’s Doonesbury (Sunday, August 6):

http://news.yahoo.com/comics/doonesbury

but more seriously, I think the real estate downturn will feel like rolling waves down, but on historic charts will look like a tsunami. Unlike a stock market crash, this will take a comparatively long time. Start date: July 2005.

[mydogsarelazy]

Here is my personal prediction for Southern California Real Estate. Bear in mind I am an art teacher, not a real estate professional.

I think that in the next 3 months the public is going to wake up to what we on this board already know: real estate is in big trouble.

There will be a “reverse panic” that will take a year or so where everyone who can will dump real estate. It is going to be harsh, so sure a Tsunami works for me.

Yes, there will be an accompanying recession etc.

Then, a few of the underlying factors will kick in. Foreigners will buy more of California with their stronger currencies and population growth will continue to stoke demand. This will lead to some stability and there will be a long period of sluggish, mediocre, relatively stable prices.

A whole generation of Californians will have learned that the idea that “real esate never goes down” is painfully wrong.

JS

[JES]

I agree with you. As much as those of on these boards are in the loop and informed, most people out there likely still believe we are going to have a soft landing, or continued appreciation. When the Union Tribune starts reporting headlines like “Sales off 40%, prices down 8%%” we will see some panic.

[barnaby33]

Other than Japan in the 1980’s, has there ever been an example of lots of foreigners buying American properties? Sure the really rich ones do, but thats always been a very small percentage. In order for stronger currencies to really help those foreigners, large numbers of them also have to become wealthy enough that either a first or second home becomes a reality. I just don’t see many places in the world that could generate that kind of wealth in the next few years. Stronger currencies will in effect hurt most countries as there current prosperity is mainly predicated on selling us stuff.

Josh

[barnaby33]

On and rolling wave vs tsunami? I would go with pebble in a medium sized bucket. The shock waves will reverberate out from the major cities and bounce back in echoing waves. I am willing to bet on several dead cat bounces on the way down. Resort towns and smaller places with no industry are going to be whacked the hardest and those losses will in turn reverberate to the people who sank primary or speculative equity into them in big cities.

Josh

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