Talked to Thornberg

[NotCranky]

How much did houses appreciate in SD after 2004? 2004 was a big year so Jan is different than Dec. After the end of 2004. I don’t really see anything going up that much comparing like to like situations. Keep in mind that a 10% appreciation through 2005-2006 in dollars was the same as 20-25% appreciation in 2003.Maybe in the neighborhoods you guys are watching prices sky rocketed in 2005-2006? I hope our ideas of prices is not contaminated by zestimates and the median too much.I sold my last property march 2005 for $575k and zestimated it later that year at around 675K.There is no way it would have ever sold for more than 600K.From my perspective reverting to 2004 is “soft landing”. .It is definitely not a return to “fundamentals” or “affordability”. 2001-2002 is somewhere in between the super bulls(1997) and the super safe bulls(2004). Its just that 2001-2002 prices would already reflect up to 50% off in so many areas and I think that is a number that is hard to accept. I am trying though!

[NotCranky]

How much did houses appreciate in SD after 2004? 2004 was a big year so Jan is different than Dec. After the end of 2004. I don’t really see anything going up that much comparing like to like situations. Keep in mind that a 10% appreciation through 2005-2006 in dollars was the same as 20-25% appreciation in 2003.Maybe in the neighborhoods you guys are watching prices sky rocketed in 2005-2006? I hope our ideas of prices is not contaminated by zestimates and the median too much.I sold my last property march 2005 for $575k and zestimated it later that year at around 675K.There is no way it would have ever sold for more than 600K.From my perspective reverting to 2004 is “soft landing”. .It is definitely not a return to “fundamentals” or “affordability”. 2001-2002 is somewhere in between the super bulls(1997) and the super safe bulls(2004). Its just that 2001-2002 prices would already reflect up to 50% off in so many areas and I think that is a number that is hard to accept. I am trying though!

[Bugs]

I don’t think SD County is moving as quickly into this downtrend as Riverside County, nor do I think it will bottom out as hard.

The areas in SD County that peaked the earliest did so in the Summer of 2005 or thereabouts. The majority of the market segments peaked at various times over the next 12 months after that. Only a few market segments peaked after Summer of 2006, although that wouldn’t have been apparent by looking at the new home sales because of the concessions the developers were giving away so they could maintain the illusion of a stable price structure.

So all in all, I guess you could say that in SD County, retraction to mid-2004 pricing could probably be stretched to fit the definition of the soft landing the permabulls were wishing for when their vaunted New Paradigm theory proved itself to be unfounded. We’re still at or below a -15% off peak pricing range in a lot of market segments. The bottom end seems to be getting it worse right now, but losses in excess of ~15% haven’t spread throughout the middle and upper pricing ranges as yet.

Now by the time we get to the beginning of 2003 pricing we’ll be talking about some epic corrections. But that’s still a long ways off at this point.

I truly think that most buyers in 2007 are going to (privately) kick themselves by the time 2009 rolls around.

[Bugs]

I don’t think SD County is moving as quickly into this downtrend as Riverside County, nor do I think it will bottom out as hard.

The areas in SD County that peaked the earliest did so in the Summer of 2005 or thereabouts. The majority of the market segments peaked at various times over the next 12 months after that. Only a few market segments peaked after Summer of 2006, although that wouldn’t have been apparent by looking at the new home sales because of the concessions the developers were giving away so they could maintain the illusion of a stable price structure.

So all in all, I guess you could say that in SD County, retraction to mid-2004 pricing could probably be stretched to fit the definition of the soft landing the permabulls were wishing for when their vaunted New Paradigm theory proved itself to be unfounded. We’re still at or below a -15% off peak pricing range in a lot of market segments. The bottom end seems to be getting it worse right now, but losses in excess of ~15% haven’t spread throughout the middle and upper pricing ranges as yet.

Now by the time we get to the beginning of 2003 pricing we’ll be talking about some epic corrections. But that’s still a long ways off at this point.

I truly think that most buyers in 2007 are going to (privately) kick themselves by the time 2009 rolls around.

[NotCranky]

Homes and shacks in areas like city hts,logan heights encanto, lemon grove, north park, normal hts ect. appreciated enormously compared to any value I can see in them, so much so that a much better house in clairmnont, poway,san carlos or other similiar established middle class area was only a little more expensive. The first list should get slammed just because it shouldn’t be priced anywhere near better areas with a better mix of decent housing stock.

[NotCranky]

Homes and shacks in areas like city hts,logan heights encanto, lemon grove, north park, normal hts ect. appreciated enormously compared to any value I can see in them, so much so that a much better house in clairmnont, poway,san carlos or other similiar established middle class area was only a little more expensive. The first list should get slammed just because it shouldn’t be priced anywhere near better areas with a better mix of decent housing stock.

[DaCounselor]

Maybe I missed an earlier and accepted definition on this site regarding what exactly “20XX pricing” means, because I don’t understand precisely what is being referred to. For instance, in 2004 the same floorplan sold in my neighborhood for as low as $386K and as high as $459K. So what is 2004 pricing? The average? The median? The high? The low? As you can see in this one example, how you define “2004 pricing” makes a big difference in the analysis.

[DaCounselor]

Maybe I missed an earlier and accepted definition on this site regarding what exactly “20XX pricing” means, because I don’t understand precisely what is being referred to. For instance, in 2004 the same floorplan sold in my neighborhood for as low as $386K and as high as $459K. So what is 2004 pricing? The average? The median? The high? The low? As you can see in this one example, how you define “2004 pricing” makes a big difference in the analysis.

[Bugs]

DaC

Granted, there will be some variance at any given time. May I ask if both of those 2004 sales occur in the same quarter the way I’ve been referencing it or are you using the broader term of the entire year on your own?

My preferred method of comparing the effects of the different time periods is to use paired sales of the same property that sold during both time periods. Of course, that only works when I can find those examples. Another way to do it is to compare like for like during the different time periods – obviously that’s not as reliable as actual paired sales but much easier to identify and compile. I can largely make up for the lack of specificity by using a lot more data.

If you want, I can easily look up the original MLS listings for both your high and low sales and figure out where they’d each have been at peak as well as today. Neither one of them would tell the whole story, but they probably would both point in the same general direction.

Would you care to volunteer the 2 sales in question? Actually, I only need one of them – I can find the other one on my own.

[Bugs]

DaC

Granted, there will be some variance at any given time. May I ask if both of those 2004 sales occur in the same quarter the way I’ve been referencing it or are you using the broader term of the entire year on your own?

My preferred method of comparing the effects of the different time periods is to use paired sales of the same property that sold during both time periods. Of course, that only works when I can find those examples. Another way to do it is to compare like for like during the different time periods – obviously that’s not as reliable as actual paired sales but much easier to identify and compile. I can largely make up for the lack of specificity by using a lot more data.

If you want, I can easily look up the original MLS listings for both your high and low sales and figure out where they’d each have been at peak as well as today. Neither one of them would tell the whole story, but they probably would both point in the same general direction.

Would you care to volunteer the 2 sales in question? Actually, I only need one of them – I can find the other one on my own.

[NotCranky]

Counselor,
It seems pretty clear that using years is fairly useful in a broad sort of way.Perhaps that is assuming too much? It might depend on how familiar one is with the past appreciation and what ones goals are.I very clearly pointed out that 2004 was a year of tremendous change from jan-dec. If you want to make intra year comparisions of specific properties that seems like a different topic to me. I can give you an example of a listing that would have sold for 575k in a day in July 04, didn’t get a nibble in Sept /Oct of same year at 485k and sold march 2005 for the 575k. So What? Going back pre 2003 is hugely meaningful as to what appreciation would be wiped out even compared to 2004. Going from 2003 to 1997 has similiar effect. That should be clear. Going from peak back to 1997 we are talking serious drama as well as horrendous consequences to “equity”.

[NotCranky]

Counselor,
It seems pretty clear that using years is fairly useful in a broad sort of way.Perhaps that is assuming too much? It might depend on how familiar one is with the past appreciation and what ones goals are.I very clearly pointed out that 2004 was a year of tremendous change from jan-dec. If you want to make intra year comparisions of specific properties that seems like a different topic to me. I can give you an example of a listing that would have sold for 575k in a day in July 04, didn’t get a nibble in Sept /Oct of same year at 485k and sold march 2005 for the 575k. So What? Going back pre 2003 is hugely meaningful as to what appreciation would be wiped out even compared to 2004. Going from 2003 to 1997 has similiar effect. That should be clear. Going from peak back to 1997 we are talking serious drama as well as horrendous consequences to “equity”.

[hipmatt]

2004 levels… hmm they are just around the corner if not already here. Thats not much or a retreat…. I still think this will last until around 2010 and will see about 2002 levels.

[hipmatt]

2004 levels… hmm they are just around the corner if not already here. Thats not much or a retreat…. I still think this will last until around 2010 and will see about 2002 levels.

[sdappraiser]

IMO the doomsday scenarios some of you are wishing for won’t happen. What most of you fail to analyze or consider is the average person’s PERCEPTION of price levels.

The average cost of gasoline in April 2003 was around $1.67 per gallon.

http://www.cnn.com/2003/US/04/06/gas.survey/

What’s it today, $3.30 plus or minus? Does the average person yearn for $1.67 gas again? Probably, but if it dropped just below $3 I reckon the average person would PERCEIVE the price had dropped so much they are now getting a good deal. I bet that would register as an increase in consumer confidence and a PERCEIVED increase in disposable income.

Sure the fundamentals have to correct… sure prices must come down to make sense.. but they will not go down to the levels some of you predict because human nature will not allow it. 2002 levels is my guess – that is when things last appeared to be in a general state of balance.

There are some smart people around here, but most of you are blinded by over-analysis and a lack of real world contact with the AVERAGE person. Many of you have expressed your amazement at how friends/family refuse to listen to your spiels. Instead of pounding them with facts and figures, next time take a few minutes to talk to them about their expectations and how they perceive whats going on.

I know there are holes in this theory, and I don’t have the time or inclination to argue it.. but I really believe there is some basis here.

I would like to hear what Bugs and the realtors think about this, since they are out in the field talking to the average person.

[Author]

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