So you still think that a 50% correction or more is crazy???

[poorgradstudent]

A popular rhetorical question around here is “who are the buyers who will step in if prices drop X%?”

*raises hand*

I’m graduating with my PhD this late spring/early summer (’08). Assuming I can find a job in my field, I’ll immediately start saving for a down payment. If prices fall 50% from their peak, you’re damn certain I will have bought when they were down 40%.

That said, they’re still way too high for me to afford on my expected future salary, which is above the median. I still think 50% is a bit high for what the final number will be, but time will tell.

[cr]

pgs-

The point we (those of us who think 50% is reasonable) are trying to make is that the numbers out there – rising foreclosures, prices, inventory levels, rents, and incomes – all point to a downward direction.

The last two bubbles saw declines all the way back down to more or less where they started.

I forget how many months of inventory there are currently, but I believes it’s close to a year. Foreclosures in CA are up 400% from 1 yr ago, and even the CA association of Realtors now expects a 9% drop. What does THAT tell you?

There’s simply not enough people making enough money to sustain these prices, so they will fall. I think they will fall past what would be an equilibrium because of how housing moves and how people react.

[cr]

pgs-

The point we (those of us who think 50% is reasonable) are trying to make is that the numbers out there – rising foreclosures, prices, inventory levels, rents, and incomes – all point to a downward direction.

The last two bubbles saw declines all the way back down to more or less where they started.

I forget how many months of inventory there are currently, but I believes it’s close to a year. Foreclosures in CA are up 400% from 1 yr ago, and even the CA association of Realtors now expects a 9% drop. What does THAT tell you?

There’s simply not enough people making enough money to sustain these prices, so they will fall. I think they will fall past what would be an equilibrium because of how housing moves and how people react.

[Doofrat]

Cooprider14,

I was joking, but it does sound like the typical justification for buying a house, doesn’t it?

[Doofrat]

Cooprider14,

I was joking, but it does sound like the typical justification for buying a house, doesn’t it?

[JWM in SD]

“I was joking, but it does sound like the typical justification for buying a house, doesn’t it?”

Yes, it does sound like that it. The scary thing in retrospect is that the issues you cited were amongst the more tame agruments that permabulls used circa 18 to 24 mos ago when a lot of us earned battle scars. If you go to Housing Panic or Irvine Housing Blog, you will still see some that kind of post.

[JWM in SD]

“I was joking, but it does sound like the typical justification for buying a house, doesn’t it?”

Yes, it does sound like that it. The scary thing in retrospect is that the issues you cited were amongst the more tame agruments that permabulls used circa 18 to 24 mos ago when a lot of us earned battle scars. If you go to Housing Panic or Irvine Housing Blog, you will still see some that kind of post.

[joebaduba]

"Instead of the next housing article featuring someone whining about how their loan officer lied to them and now they can't afford their house, I want the reporter to talk to a local cop or local teacher who has been renting- or commuting absurd distances- who is now thinks they may actually be able to buy in the community in which they work. Heck- I don't know many reporters who make enough to afford a house in San Diego. They could just interview themselves and make my point."

Reporters can't talk to any locals and they don't need to buy a house in San Diego. Or anywhere else in this country for that matter. They've been outsourced. Check out the byline and source on this article from the UT posted on Patrick

http://www.signonsandiego.com/news/business/20071009-0637-s&p-economy-global.html?ref=patrick.net

[joebaduba]

"Instead of the next housing article featuring someone whining about how their loan officer lied to them and now they can't afford their house, I want the reporter to talk to a local cop or local teacher who has been renting- or commuting absurd distances- who is now thinks they may actually be able to buy in the community in which they work. Heck- I don't know many reporters who make enough to afford a house in San Diego. They could just interview themselves and make my point."

Reporters can't talk to any locals and they don't need to buy a house in San Diego. Or anywhere else in this country for that matter. They've been outsourced. Check out the byline and source on this article from the UT posted on Patrick

http://www.signonsandiego.com/news/business/20071009-0637-s&p-economy-global.html?ref=patrick.net

[davelj]

I don’t think the median price/sqft will decline by 50% peak to trough here in SD in nominal terms. I think we’re down about 11%-12% now (after almost two years) and I’ve been saying for some time that a 35%ish decline is possible. But I may be too bearish on that prediction. Now, clearly, there will be plenty of individual properties that do decline by 50% and more, but that’s not the “market,” those are anecdotes.

Recall that the government will help (however little) to put a floor on the decline by way of cockamamie bailout schemes and the Fed will fire up the inflation furnaces. In addition, you’ll see plenty of money enter the market once we start seeing larger price declines. Despite its issues, SD is still widely considered one of the more desirable places to live in the U.S.

Clearly, a 50% drop in the median p/sqft isn’t impossible. But it seems HIGHLY unlikely even under the most bearish interpretation of the data. Although I’d welcome it, I just don’t see it happening. Just my two cents.

[davelj]

I don’t think the median price/sqft will decline by 50% peak to trough here in SD in nominal terms. I think we’re down about 11%-12% now (after almost two years) and I’ve been saying for some time that a 35%ish decline is possible. But I may be too bearish on that prediction. Now, clearly, there will be plenty of individual properties that do decline by 50% and more, but that’s not the “market,” those are anecdotes.

Recall that the government will help (however little) to put a floor on the decline by way of cockamamie bailout schemes and the Fed will fire up the inflation furnaces. In addition, you’ll see plenty of money enter the market once we start seeing larger price declines. Despite its issues, SD is still widely considered one of the more desirable places to live in the U.S.

Clearly, a 50% drop in the median p/sqft isn’t impossible. But it seems HIGHLY unlikely even under the most bearish interpretation of the data. Although I’d welcome it, I just don’t see it happening. Just my two cents.

[cr]

doofrat-

I wondered that after I posted, and I was thinking, man has this guy read anything on here? Typing just doesn’t convey the sarcasm you sometimes hope it does. Then again, there have been people who have responded like that and meant it!

Because you’re right, I used to think I was financially saavy because I didn’t want to rent and “throw money out the window.”

Looking back at your post, I should have figured out the taking advise from a realtor part.

Happy waiting.

[cr]

doofrat-

I wondered that after I posted, and I was thinking, man has this guy read anything on here? Typing just doesn’t convey the sarcasm you sometimes hope it does. Then again, there have been people who have responded like that and meant it!

Because you’re right, I used to think I was financially saavy because I didn’t want to rent and “throw money out the window.”

Looking back at your post, I should have figured out the taking advise from a realtor part.

Happy waiting.

[Author]

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