SPECULATE HERE!

[kev374]

Just for kicks, I’d like to get some opinions on what you guys see for the future in terms of pricing. So, post WHEN do you think the median home price in Orange County and/or LA will hit $400,000!!!! Let’s hear it.

My guestimate: 4Q 2008

[Chris Scoreboard Johnston]

Chris Johnston

Never, it will not come down to that level in OC ever in my opinion. We will be lucky if it drops 20% from the 646k high.

[JWM in SD]

Bwhahahaha, are you freaking kidding me?? Get a clue pal, OC is toast.

[LookoutBelow]

Depends on how bad it gets…there is evidence tosuggest this could very well be a "Depression" era sized meltdown….who knows ??…..but it will meltdown

[PerryChase]

I tend to agree with Chris when it comes to the median.

However, I believe that overall prices would’ve dropped 30% by Q1 2010 in OC and stagnate for another 10 years from that time. It’ll be about 1 year earlier in San Diego.

The real estate economy feeds on itself. Once the appreciation and price support are gone the fundamentals aren’t there to justify the prices. Even at 30% off, houses would still be very richly valued.

[(former)FormerSanDiegan]

PC –

What do you mean by “stagnate” ? Do you mean they will increase at inflation or stay flat in nominal prices. Over 10 years there is a huge difference.

[farbet]

Kulifonia dreaming

[kewp]

Wasn’t there a post recently that some OC properties just closed escrow at 800K, down from a peak for 1.5 million?

Assuming thats true, thats close to a fifty percent drop already. Still out of the range of the average wage earner, tho.

Keep in mind that assuming the median price does drop to 400K, it will be on the heels of a recession and almost certain tightened lending standards, so it will probably be only marginally more realistic to purchase in that area then as it is now.

[Chris Scoreboard Johnston]

Chris Johnston

I am talking about the median, which dropped 17.6% in the 90’s decline. The median as we know is not a great measure. Individual properties will vary, with some dropping much more. In general things are down about 10% now even though the median does not show a decline. I am willing to bet on this with you JWM, let’s put some cash on this. I will take 20% or less basis the median, you take the over. Name the amount. Let’s have some fun!

[JWM in SD]

Sorry, not in the habit of making bets with message board posters that I don’t know. Try someone else on that one.

[PerryChase]

Although I follow the OC market, I don’t pay as close attention to it as San Diego’s.

I know someone who, at the 1990 peak, bought a 2800sf house for $380k in Penasquitos. It’s on the hill with a view. He could afford the house and rode-out the downturn. He lost subtantially on that house without realizing it.

Look at this 3400sf house below in Carmel Valley. It sold for $399k in Sept 1997 — a bigger house in what I would say is a better location closer to the coast.

5131 RUETTE DE MER, SD – Carmel Valley, CA 92130**
List Price: $1,097,500 – $1,097,500
Bedrooms: 5
Full Baths: 4
Partial Baths: 0
Square Feet: 3,439
Lot Size: 4,356 Sq. Ft.
Year Built: 1998
Listing Date: 02/22/07
On Market: 1 day
Type: SFR
Status: ACTIVE
MLS #: 076014910

http://sdlookup.com/PropertyDetails/tabid/53/pid/4376BC4E/Default.aspx
http://www.ziprealty.com/buy_a_home/logged_in/search/my_home_detail.jsp?listing_num=076014910&property_type=SFR&mls=mls_sandiego&cKey=pvt3kc7z&source=SANDICOR

As Chris pointed out, the median does not reflect price movements of like-for-like houses. The downturn is a great apportunity to get move value for your money. It happens only one in a couple of decades so take advantage of it.

FormerSanDiegan, by stagnate, I mean increase sporatically at or below inflation and often times not at all, depending on the neighborhood. That’s what I observed in the last downturn. Even with small price appreciation, the transaction costs would eat up any gains.

Someone mentioned on another thread that, within 10 years, the baby boomers will begin retiring. That will dampen any future recovery or prolong the downturn.

[Bugs]

The demographics of the boomers may turn out to be of benefit to San Diego’s economy and it may bolster prices here.

Some of the money propping up pricing here is money that was earned elsewhere, including retirement money earned back east and inherited wealth from the generation that actually saved.

As boomers across the nation retire, some of them might wind up with enough money to realize their dream of retiring in San Diego. If so, these people would be unaffected by local wages.

As a percentage I wouldn’t think very many boomers nationwide would fall into this category, but by sheer numbers it might just be enough to be of influence on local pricing, at least for some areas and price ranges.

[blahblahblah]

Yeah, that’ll keep prices from falling. All of those retiring boomers from Des Moines and Tulsa will be giving up their salaries, falling back on whatever tiny pensions and 401K they’ve got to move to SD and purchase $1M homes in Carmel Valley. They can use their SS payments to help with the property tax. I guess I’m doomed to be a bitter renter forever 🙁

[JWM in SD]

Yeah, but first they have to sell their house…..

[PerryChase]

Bugs, you make an interesting point about boomers helping prop-up the SD market. If you’re right, then the SD downtown market should be quite healthy in the future.

I’m wondering if San Diego will attract many millionaire retirees. Middle class retirees are better-off somewhere in the South.

If boomer-retirees start leaving the less desirable climates in droves for California, would the resulting cheap prices in those areas not convince many more to remain?

I was talking to an immigrant friend yesterday. His old sister and brother-in-law who are in their mid 50s just immigrated to Orange County and were lamenting the high cost of living. They have no money, need to learn English and have to start over.

I suggested that they move to Houston where there’s a large employment base and where brand-new houses can be had for $120k. They can work hard in the next 15 years to pay off the house then live-off of savings and social security.

[Author]

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