Ben Jones had a story on the NY market. It looks like the $1M + market is getting hit pretty hard in the Hamptons, at least for now in areas away from the water.
I believe that San Diego will soon see similar price declines for $1M + houses in areas such as Poway, RB, Scripps Ranch, Del Sur, Santa Luz, etc…
I don’t think that (except for rare cases) there are such things as superior homes that will be immune from price declines. The tides lift all boats and the same works in reverse.
If anything, the average type houses will hold values better than the premium houses where there are fewer potential buyers.
I don’t have the answer. I willing to wait and see. What do you guys think?
“On the housing front, those properties priced below a million dollars were down last year by 5 percent from August 2005 highs, said Chris Chapin, a broker in East Hampton. ‘The hardest-hit range was from $1 million to $4 million, north of the highway, away from water, and outside any village.’”
“‘Properties in this price and geographic area went into contract, in some cases, at 25 to 30 percent less than what they might have sold for in August 2005,’ said Mr. Chapin. ‘In the summer and early autumn, these sellers were dropping asking prices hundreds of thousands of dollars at a time. Every day, the reductions would come in over the fax machine.’”
I agree with you. When we hit the bottom, price difference between houses will be much smaller than it is now. In 1996, 1300-1400sq-ft house in Mira Mesa is selling for $160k, while a 2700 sq-ft house in Sorrento Valley is only in the low-mid $200k range. At the peak of the bubble, the same house in MM went for $500k while the house in Sorrento Valley went for around $1M. So my prediction is, top end will contract a lot more than the low end.
I noticed that Pardee has listed their Derby Hills houses in Carmel Valley on the MLS (low $1M). They are competing favorably with resale houses and I would say that they are about $100k lower then the resales.
From the other thread about Mello Roos, it seems like Pardee is one step ahead of the market in moving their houses. From what I understand, Pardee has owned land for decades so they have tremendous margins to work with. Pardee is also owned by Weyerhaeuser, the timber company. What is Pardee’s cost? $100/sf?
I wouldn’t surprised if Pardee dropped the Derby hills prices to the high $900k by mid-year and lower than that if the houses don’t move. If that’s the case, then prices will be driven down from the premium segment.
…. ok gotta run to a late night dinner.
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