Temperature Check for 2008 – Now how low do you think it will go?

[Bugs]

Some of our other regulars have opined – and I agree – that we’re currently in the 4th or 5th inning of this pricing correction ballgame.

Back not so long ago, when the question was asked “how low do you think it will go?” we got some different answers. A few people were thinking it would only be 20-30%; most people were thinking 30%-40%, and some of the uber-bears were thinking a solid 50%.

I remember raising the possibility that because the peak was so grossly distorted the resulting correction could head back down into very undervalued territory, and that -70% overcorrections might not be out of the question. At the time I think there were only a couple people (4plexowner comes to mind) who thought I wasn’t crazy.

That was then, this is now. I still think that there are a few market segments that might hit a -70% lowpoint. Not all of them and certainly not the CV/Scripps areas that a lot of you seem to covet, but possibly enough of them to skew the Countywide medians below the 50%-off-peak mark.

What’s your current opinion? And why?

[Ren]

I think 70% is certainly possible, definitely for condo conversions in less desireable areas, where the apartment was not built to condo specs. For example, a friend lived in a 1-bedroom 651 sq ft San Marcos apartment (Mission Park complex). It was converted in late 2004, and he was offered his unit for $185k without upgrades. That’s for a tiny apartment with thin walls, including one shared in the master bedroom, so you get to listen to your neighbor snore.

Those “condos” never went over $220k or so in 2005. There are a few on the market for $148k, and one recently sold for $128k (if I read the history correctly). In my opinion they’re worth maybe $50-$70k, and I can see them reaching that, especially in a few years with a glut of other much more desireable condos on the market in the $100k’s.

[Ren]

I think 70% is certainly possible, definitely for condo conversions in less desireable areas, where the apartment was not built to condo specs. For example, a friend lived in a 1-bedroom 651 sq ft San Marcos apartment (Mission Park complex). It was converted in late 2004, and he was offered his unit for $185k without upgrades. That’s for a tiny apartment with thin walls, including one shared in the master bedroom, so you get to listen to your neighbor snore.

Those “condos” never went over $220k or so in 2005. There are a few on the market for $148k, and one recently sold for $128k (if I read the history correctly). In my opinion they’re worth maybe $50-$70k, and I can see them reaching that, especially in a few years with a glut of other much more desireable condos on the market in the $100k’s.

[Ren]

I think 70% is certainly possible, definitely for condo conversions in less desireable areas, where the apartment was not built to condo specs. For example, a friend lived in a 1-bedroom 651 sq ft San Marcos apartment (Mission Park complex). It was converted in late 2004, and he was offered his unit for $185k without upgrades. That’s for a tiny apartment with thin walls, including one shared in the master bedroom, so you get to listen to your neighbor snore.

Those “condos” never went over $220k or so in 2005. There are a few on the market for $148k, and one recently sold for $128k (if I read the history correctly). In my opinion they’re worth maybe $50-$70k, and I can see them reaching that, especially in a few years with a glut of other much more desireable condos on the market in the $100k’s.

[Ren]

I think 70% is certainly possible, definitely for condo conversions in less desireable areas, where the apartment was not built to condo specs. For example, a friend lived in a 1-bedroom 651 sq ft San Marcos apartment (Mission Park complex). It was converted in late 2004, and he was offered his unit for $185k without upgrades. That’s for a tiny apartment with thin walls, including one shared in the master bedroom, so you get to listen to your neighbor snore.

Those “condos” never went over $220k or so in 2005. There are a few on the market for $148k, and one recently sold for $128k (if I read the history correctly). In my opinion they’re worth maybe $50-$70k, and I can see them reaching that, especially in a few years with a glut of other much more desireable condos on the market in the $100k’s.

[Ren]

I think 70% is certainly possible, definitely for condo conversions in less desireable areas, where the apartment was not built to condo specs. For example, a friend lived in a 1-bedroom 651 sq ft San Marcos apartment (Mission Park complex). It was converted in late 2004, and he was offered his unit for $185k without upgrades. That’s for a tiny apartment with thin walls, including one shared in the master bedroom, so you get to listen to your neighbor snore.

Those “condos” never went over $220k or so in 2005. There are a few on the market for $148k, and one recently sold for $128k (if I read the history correctly). In my opinion they’re worth maybe $50-$70k, and I can see them reaching that, especially in a few years with a glut of other much more desireable condos on the market in the $100k’s.

[JWM in SD]

JWM in SD

It’s possible because of your “all markets are interconnected” theory Bugs. That was by far the best post I have read here.

That being said, there are still a lot people who are either in denial or they are being disingenuous with their more recent opinions lately.

To those who like to pretend that they were bearish all along: You were lying a year ago, and you are lying now. You don’t fool me one bit.

[JWM in SD]

JWM in SD

It’s possible because of your “all markets are interconnected” theory Bugs. That was by far the best post I have read here.

That being said, there are still a lot people who are either in denial or they are being disingenuous with their more recent opinions lately.

To those who like to pretend that they were bearish all along: You were lying a year ago, and you are lying now. You don’t fool me one bit.

[JWM in SD]

JWM in SD

It’s possible because of your “all markets are interconnected” theory Bugs. That was by far the best post I have read here.

That being said, there are still a lot people who are either in denial or they are being disingenuous with their more recent opinions lately.

To those who like to pretend that they were bearish all along: You were lying a year ago, and you are lying now. You don’t fool me one bit.

[JWM in SD]

JWM in SD

It’s possible because of your “all markets are interconnected” theory Bugs. That was by far the best post I have read here.

That being said, there are still a lot people who are either in denial or they are being disingenuous with their more recent opinions lately.

To those who like to pretend that they were bearish all along: You were lying a year ago, and you are lying now. You don’t fool me one bit.

[JWM in SD]

JWM in SD

It’s possible because of your “all markets are interconnected” theory Bugs. That was by far the best post I have read here.

That being said, there are still a lot people who are either in denial or they are being disingenuous with their more recent opinions lately.

To those who like to pretend that they were bearish all along: You were lying a year ago, and you are lying now. You don’t fool me one bit.

[kewp]

I still think we are in the first inning.

We still have coming up…

Lots of ARM resets, especially of the option variety.

Banks unloading repos.

Credit crunch.

Inflation.

And most importantly, a massive recession brought on by and then exacerbating the above.

I think ’99 prices are in the bag (may take a few years to get there). If the economy doesn’t recover and we overshoot, ’89 here we come.

[kewp]

I still think we are in the first inning.

We still have coming up…

Lots of ARM resets, especially of the option variety.

Banks unloading repos.

Credit crunch.

Inflation.

And most importantly, a massive recession brought on by and then exacerbating the above.

I think ’99 prices are in the bag (may take a few years to get there). If the economy doesn’t recover and we overshoot, ’89 here we come.

[kewp]

I still think we are in the first inning.

We still have coming up…

Lots of ARM resets, especially of the option variety.

Banks unloading repos.

Credit crunch.

Inflation.

And most importantly, a massive recession brought on by and then exacerbating the above.

I think ’99 prices are in the bag (may take a few years to get there). If the economy doesn’t recover and we overshoot, ’89 here we come.

[kewp]

I still think we are in the first inning.

We still have coming up…

Lots of ARM resets, especially of the option variety.

Banks unloading repos.

Credit crunch.

Inflation.

And most importantly, a massive recession brought on by and then exacerbating the above.

I think ’99 prices are in the bag (may take a few years to get there). If the economy doesn’t recover and we overshoot, ’89 here we come.

[Author]

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