September 14, 2006 at 8:00 AM #7499savingforahouseParticipant
I just joined, and am impressed. As someone who works with empirical data, the overview about the bubble has been interesting. Rrtional and logical this market aint!!
My comment is one.
Whenever presenting proportional data one should always present at least a few of the real numbers to ensure that we know what 30%, 50%, etc., is. (pardon the grammar).
In tracking these data, could the decline in value in a neighborhood be masked by a lack of information on the numbers of likely foreclosures (increasing at 3% per month; a previous post))there?
If 30% (eg. 500 units) of carmel valley is overextended, and just a fraction of the homes are currently for sale (eg 3%, 50 units) the real value of the homes is likely to decline rapidly if there are signficant forclosures there. Thus an index of pre-foreclosure by neighborhood could clearly give an indication housing stock that is likely to be ‘available’ in a neighborhood, and therefore an index of the likely decline in prices as things go south. Does this make sense??
Does someone have this info to post for some of the neighborhoods (Carmel Valley, central sandiego)??
Hoping for a crash so I can buy cheap (relative anyway!!!).
cheersSeptember 14, 2006 at 8:46 AM #35300sdduuuudeParticipant
It isn’t the fraction of homes that are for sale, but the fraction of homes actually purchased that are important.
3% of homes may be for sale, but if only half of those are purchased, those are the ones that set the price.September 14, 2006 at 9:43 AM #35306powaysellerParticipant
savingforahouse, that sounds like a promising chart to make, although I don’t know how much of a leading indicator it would be. Anything that adds to inventory, whether it is job loss, divorce, foreclosure, overbuilding, puts downward pressure on prices.
If you were to look at the number of foreclosure in a neighborhood to get a sense of excess inventory, why not take it further and look at unemployment and overbuilding by neighborhood? San Marcos had more overbuilding than Poway, so San Marcos has more downward price pressure than Poway, etc.
I noticed that the lower income areas have more foreclosures.September 14, 2006 at 10:29 AM #35318AnonymousGuest
“Hoping for a crash so I can buy cheap (relative anyway!!!).”
May I ask a question or two?
If there is a crash – how do you determine when the entry point (or re-entry point) is? Price declines brought on by foreclosures and employment losses seem to feed on themselves (to some extent). If we see a substantial decline I would imagine that more and more people will take the route of walking away from their properties and this would just fuel further declines in prices.
Secondly, if there is a substantial “crash” what impact do you think it will have on the availability of credit and the flexibility of loan programs? The FHA was instituted years ago to help prop up the housing market after the depression and I don’t think they have too many exotic options these days.
I find that I don’t want to be a cheerleader for a “Crash” as I think the pain and suffering will be too great. An orderly move toward an equilibrium would seem the best case scenario but my guess is that isn’t going to happen.September 14, 2006 at 10:48 AM #35322powaysellerParticipant
Larry J., I am working on a real estate forecasting model, but it’s not ready yet. For now, the basic thing I would look for is that prices have stopped dropping and are coming back up. Stay in touch with realtors, because they will be the first to know when demand picks back up. Do not use the median at all. Before we hit bottom, we have a lot of pain and excess to work through; we’ve got several million foreclosures to get off our hands. By the time this housing market stabilizes, it will once again be possible for a 28-yr-old to get a starter home in San Diego.September 14, 2006 at 11:06 AM #35308
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