What’s Your Prediction For Next 12/24 Months?

[Steve Beebo]

Median prices for single family resales topped out in November 2005, and lost about 5% in the last year.

Whether you think this is a reliable statistic or not, where do you think the median price figure will be in November of 2007, and November of 2008?

In a normal, stable market, (if we ever have one), I think median SFR prices should increase by about 3-4% per year, to keep up with inflation, and also to reflect the fact that the average sized home increases in size almost every year. For example, in the last 12 months, the average size of all resale SFRs in S.D. County was 2027 s.f., as reported by the MLS. Four years ago, the average size of all sales in the previous 12 months was 1927 s.f. So if we have a 12 month period where the median price is flat, I would consider that a very soft market – prices are not keeping pace with inflation at all.

In the last 12 month period, where the median price dropped 5%, I would consider that to be quite a bad market.

I’m going to guess that the next 12 months we’ll have another 5% drop, with another 3% drop the next year. But what do I know? – that’s just my guess.

[(former)FormerSanDiegan]

The next 24 months will be the worst segment of the housing downturn. As the 2nd and 3rd (or 3rd and 4th, depending how you measure) year of the slowdown, this is typically where prices accelerate to the downside.

I expect a drop in median SFR Central SD of 5-10% each of the next two years. I’d guesstimate ~15% over the next 24-30 months in the median, putting the total drop in median somewhere around 20% from the peak within 2-2.5 years.

That said, individual homes will likely experience more significant declines. But you asked about the median.

[no_such_reality]

I tend to agree with some of realtors on the board that argue real prices on like for like homes are in reality down 20% already.

I suspect next year, those like for likes will be down 3-5% and then following year the same. The slow down in price drop will come from what we’re already seeing, which is homes being pulled off the market. I don’t see bank’s getting aggressive

Too many are already finding they can’t sell their home and will need to fight it out and get creative refinancing to delay so they don’t “give their home away” to some low-ball buyer.

Using standard median, I suspect we’ll see a steepening of the loss as the median has been buffered by the last of the move up buyers.

[sdrealtor]

NSR is right on target. I think we will see about a 5% drop in nominal prices this year although I suspect the median could drop more than that(as much as 10%) as it lags the true market. I wouldnt even venture to guess what the median will do beyond next year as it depends greatly on the mix of homes sold which is impacted by too many factors to consider.

[blahblahblah]

I read somewhere (maybe SoCalMtgGuy?) that there were tons of cash-out refinancings in the last year; FBs may use this money to stave off the reaper for another year or two which could slow down the collapse a bit.

Okay, here’s where I got this from. It’s in comment #43…

[SD Realtor]

Agreed with the other posts… My heart wants at least 8-10% per year but my brain says 3-7%. I am concerned that the flat rates and sneaky lenders will help distressed people out more then anticipated and I also believe that people with substantial equity will sit on thier homes rather then take the loss. I am hoping we 25k inventory this spring. What will also be very telling will be the sales numbers. As the past few months we saw close to 30% declines in sales, I believe those numbers will level out (unfortunately)… but I hope they do not.

[blahblahblah]

Perhaps home loans will be the new credit cards. CC companies don’t care if the balance is ever paid off because they make so much in interest and fees.

[sdcellar]

I think I’m finally getting this median stuff and although I agree with sdrealtor that with so many factors it can be difficult to predict, I’ll do it anyway and say 8%.

[Doofrat]

I think alot of people believe that this downturn is only a seasonal adjustment and have either given up psychologically on selling until spring, or actually pulled their listing until Spring. I think it’ll be interesting to see what the general feeling is towards the beginning of summer, or mid summer if the market hasn’t picked up by then and everybody who pulled their listing has put it back on the market.
I’m holding off on any guess until then.

[Daniel]

I vote for a small decline next year (less than 5%), folowed by relatively flat prices in 2008, and maybe 2009 as well. That would only make a 7%-10% nominal decline from top to bottom, but a roughly 20%-25% decline in real terms.

[PerryChase]

I think that 2007 will be worse than 2006. In nominal terms, I vote for 7% Median decline in SD, since you asked about Median.

Like-for-like houses will decline another 15%. But since nobody tracks those, we’ll never know. But by this time next year, perhaps some Realtors will update us on their “feel” of the market.

[The-Shoveler]

2007 Lets see, If we get the recession NR is talking about, I think we could see a significant decline, Say around 10-15% off the Median in So-Cal in general.

If no recession then maybe another 4-6% (slow death by tooth pick).

[cr]

I’ve got a question…or two

Most of you are suggesting a decrease anywhere from 3-10% for 2007. I’ve also read that the market may decline for the next 6-8 years or so. So if the decline started last year, let’s suppose 2012 is the bottom.

If 2007 is in fact the worst year as far as a % decline, do you still expect decreases over the following 5 years even if they are less each year?

The reason I ask, is because in the previous housing bubbles graphs I’ve seen on here, I believe it was pointed out that average prices generally came right back to where they were when the bubble started. Enter the NAR claim that prices were undervalued. Well now they’re overvalued.

Home prices have doubled over the past 6-7 years in many areas, and in some areas even tripled. So given what we know about previous bubbles, shouldn’t we expect declines upwards of 30-40 or even 50% say over the next 6-8 years?

That’s just based on historical trends. If I’ve learned anything on here, it’s that ARM’s and Sub-primes have run rampant and will only increase the downturn.

I’m a neohpyte though, that’s why I’m asking.

[Steve Beebo]

I don’t believe that this will happen, but if resale median prices drop 7% in both 2007 and 2008, making a three year drop of around 20%, then the number of foreclosures will be astronomical, and the market could take 10 years to recover.

[(former)FormerSanDiegan]

I don’t believe that this will happen, but if resale median prices drop 7% in both 2007 and 2008, making a three year drop of around 20%, then the number of foreclosures will be astronomical, and the market could take 10 years to recover.

Isn’t this nearly exactly what happened in the last cycle. Prices peaked, dropped about 20% over about 4 years, then returned to the previous peak levels ~8-10 years later.

Could it happen again ?

I think so.
This is more likely than doomsday (put your money in non-dollar denominated gold bond) scenarios.

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