[Ex-SD]

It sounds to me like Ben Stein is talking about the majority of the USA and leaving CA, parts of Florida, Las Vegas, Washington DC, Seattle and a couple of other places out of his thought processes. You can’t look objectively at southern CA with all of the facts that are now in place and not come to a conclusion that prices will drop substantially. Will it be 20% or will they fall 50%…….? Nobody knows at this point but to me, it looks like we’re going to see a slow slippery slide as time goes bye and finally see a bottoming out in late 2011 or mid 2012. People will have to accept that their house is worth a whole lot less before they will lower their prices to the range where they will actually find a buyer. This will take some time, depending on each individuals circumstances. I read a story yesterday in the San Francisco Chronicle about a man who had been trying to sell the his house in the Castro Valley (SF area) for six months for $550k with no offers. He actually had equity in the home because he owed around $350k. He bought the house in early 2006. He did the smart thing and held an absolute auction. The house sold for $450k, he freed himself from the mortgage that was going to re-set next year and he walked away with some cash. Time will tell but I think he did the smartest thing he could do.
As prices in SoCal drop further and more ARM’s reset to higher rates, a huge number of people who have no equity will simply walk away from the house. Then, when the foreclosed house sells at the true market value, the comps in the area are down the drain for anyone else who has to sell their home. There are many things that are all inter-related that will continue to drive the crazy prices in these bubble markets back to some sort of sanity. When you can buy really nice homes in most parts of the country for around $200k, CA and with liar loans down the drain, etc, my guess is that SFR’s will drop as much as 40% (or more)……………but who has a crystal ball? I just look at the facts and make logical assumptions.

[Ex-SD]

It sounds to me like Ben Stein is talking about the majority of the USA and leaving CA, parts of Florida, Las Vegas, Washington DC, Seattle and a couple of other places out of his thought processes. You can’t look objectively at southern CA with all of the facts that are now in place and not come to a conclusion that prices will drop substantially. Will it be 20% or will they fall 50%…….? Nobody knows at this point but to me, it looks like we’re going to see a slow slippery slide as time goes bye and finally see a bottoming out in late 2011 or mid 2012. People will have to accept that their house is worth a whole lot less before they will lower their prices to the range where they will actually find a buyer. This will take some time, depending on each individuals circumstances. I read a story yesterday in the San Francisco Chronicle about a man who had been trying to sell the his house in the Castro Valley (SF area) for six months for $550k with no offers. He actually had equity in the home because he owed around $350k. He bought the house in early 2006. He did the smart thing and held an absolute auction. The house sold for $450k, he freed himself from the mortgage that was going to re-set next year and he walked away with some cash. Time will tell but I think he did the smartest thing he could do.
As prices in SoCal drop further and more ARM’s reset to higher rates, a huge number of people who have no equity will simply walk away from the house. Then, when the foreclosed house sells at the true market value, the comps in the area are down the drain for anyone else who has to sell their home. There are many things that are all inter-related that will continue to drive the crazy prices in these bubble markets back to some sort of sanity. When you can buy really nice homes in most parts of the country for around $200k, CA and with liar loans down the drain, etc, my guess is that SFR’s will drop as much as 40% (or more)……………but who has a crystal ball? I just look at the facts and make logical assumptions.

[Ex-SD]

This one has comments for different areas of L.A..

http://westside-bubble.blogspot.com/2007/07/hostile-tenant-short-sale.html

[Ex-SD]

This one has comments for different areas of L.A..

http://westside-bubble.blogspot.com/2007/07/hostile-tenant-short-sale.html

[Ex-SD]

This one has comments for different areas of L.A..

http://westside-bubble.blogspot.com/2007/07/hostile-tenant-short-sale.html

[Ex-SD]

PerryChase: Thanks for the welcome.
I lived in SD for 30 years but saw this coming and sold my house in early 2005……….moved to the mountains of South Carolina. I’m very interested in the outcome of this whole mess because if prices drop to where I think they will, I will sell my house here and move back.

To answer your question…………I think that SFR will return to (and bottom out at) 2000-2001 prices by late 2009-2010 and condos will return to 1999-2000 prices because they are so overbuilt in SD. I don’t claim to have a crystal ball but I’ve always been very good with my timing concerning buying & selling real estate over the last 35 years.

[Ex-SD]

PerryChase: Thanks for the welcome.
I lived in SD for 30 years but saw this coming and sold my house in early 2005……….moved to the mountains of South Carolina. I’m very interested in the outcome of this whole mess because if prices drop to where I think they will, I will sell my house here and move back.

To answer your question…………I think that SFR will return to (and bottom out at) 2000-2001 prices by late 2009-2010 and condos will return to 1999-2000 prices because they are so overbuilt in SD. I don’t claim to have a crystal ball but I’ve always been very good with my timing concerning buying & selling real estate over the last 35 years.

[Ex-SD]

PerryChase: Thanks for the welcome.
I lived in SD for 30 years but saw this coming and sold my house in early 2005……….moved to the mountains of South Carolina. I’m very interested in the outcome of this whole mess because if prices drop to where I think they will, I will sell my house here and move back.

To answer your question…………I think that SFR will return to (and bottom out at) 2000-2001 prices by late 2009-2010 and condos will return to 1999-2000 prices because they are so overbuilt in SD. I don’t claim to have a crystal ball but I’ve always been very good with my timing concerning buying & selling real estate over the last 35 years.

[Ex-SD]

When you can buy a nice, 2000 square foot home in the majority of the USA for $200k or less……….the entire state of CA is beginning to hear the rooster crowing as he announces the dawn of a brand new day in the housing market. If you can’t get financing, comps or qualified buyers……….values drop. Just plain old, basic economics.

[Ex-SD]

When you can buy a nice, 2000 square foot home in the majority of the USA for $200k or less……….the entire state of CA is beginning to hear the rooster crowing as he announces the dawn of a brand new day in the housing market. If you can’t get financing, comps or qualified buyers……….values drop. Just plain old, basic economics.

[Ex-SD]

When you can buy a nice, 2000 square foot home in the majority of the USA for $200k or less……….the entire state of CA is beginning to hear the rooster crowing as he announces the dawn of a brand new day in the housing market. If you can’t get financing, comps or qualified buyers……….values drop. Just plain old, basic economics.

[Ex-SD]

20% by the end of the year?
I think it depends on:
1) whether it’s a house or a condo
2) the area that the property is located in

There are plenty of new condo’s that are already being sold with 20% reductions in the form of prepaid, association dues, free upgrades, etc. The buyers of these properties are not very savvy because the selling price stays high and that translates to higher, yearly, property taxes and a higher mortgage payment. If they could negotiate the “freebies” as a cash discount, they would be far better off……….but then everyone else who purchased in the same building would be hounding the builder for a rebate and it would establish lower price comparables for the building. If you track the asking prices for condo’s in the more desirable areas of San Diego, you will see that some have already reduced their asking prices over the last six months by 10-20%.

Single family houses in the more desirable areas are probably going to ramp down at a slower pace and my guess is 10% by the end of the year. By September of 2008, reality will probably have set in with most of the people who really have to sell and if they have any real equity in their properties, they will take what they can get and move on………I’m guessing an additional 15% over my 10% prediction for 2007. My guess is that 2009 or 2010 will reveal the bottom which will be another reduction of 10-15% for single family houses. Then, the market will stay flat for quite a few years due to the inability of people with lower credit scores to obtain a mortgage, lack of buyers who can come up with a required down payment and/or prove their incomes to the satisfaction of the lenders who are going to tighten down like a clamp so that this mess doesn’t happen again.

I may be wrong………….but chances are………..I’m correct or darn close to the timeline and percentages.

[Ex-SD]

20% by the end of the year?
I think it depends on:
1) whether it’s a house or a condo
2) the area that the property is located in

There are plenty of new condo’s that are already being sold with 20% reductions in the form of prepaid, association dues, free upgrades, etc. The buyers of these properties are not very savvy because the selling price stays high and that translates to higher, yearly, property taxes and a higher mortgage payment. If they could negotiate the “freebies” as a cash discount, they would be far better off……….but then everyone else who purchased in the same building would be hounding the builder for a rebate and it would establish lower price comparables for the building. If you track the asking prices for condo’s in the more desirable areas of San Diego, you will see that some have already reduced their asking prices over the last six months by 10-20%.

Single family houses in the more desirable areas are probably going to ramp down at a slower pace and my guess is 10% by the end of the year. By September of 2008, reality will probably have set in with most of the people who really have to sell and if they have any real equity in their properties, they will take what they can get and move on………I’m guessing an additional 15% over my 10% prediction for 2007. My guess is that 2009 or 2010 will reveal the bottom which will be another reduction of 10-15% for single family houses. Then, the market will stay flat for quite a few years due to the inability of people with lower credit scores to obtain a mortgage, lack of buyers who can come up with a required down payment and/or prove their incomes to the satisfaction of the lenders who are going to tighten down like a clamp so that this mess doesn’t happen again.

I may be wrong………….but chances are………..I’m correct or darn close to the timeline and percentages.

[Ex-SD]

20% by the end of the year?
I think it depends on:
1) whether it’s a house or a condo
2) the area that the property is located in

There are plenty of new condo’s that are already being sold with 20% reductions in the form of prepaid, association dues, free upgrades, etc. The buyers of these properties are not very savvy because the selling price stays high and that translates to higher, yearly, property taxes and a higher mortgage payment. If they could negotiate the “freebies” as a cash discount, they would be far better off……….but then everyone else who purchased in the same building would be hounding the builder for a rebate and it would establish lower price comparables for the building. If you track the asking prices for condo’s in the more desirable areas of San Diego, you will see that some have already reduced their asking prices over the last six months by 10-20%.

Single family houses in the more desirable areas are probably going to ramp down at a slower pace and my guess is 10% by the end of the year. By September of 2008, reality will probably have set in with most of the people who really have to sell and if they have any real equity in their properties, they will take what they can get and move on………I’m guessing an additional 15% over my 10% prediction for 2007. My guess is that 2009 or 2010 will reveal the bottom which will be another reduction of 10-15% for single family houses. Then, the market will stay flat for quite a few years due to the inability of people with lower credit scores to obtain a mortgage, lack of buyers who can come up with a required down payment and/or prove their incomes to the satisfaction of the lenders who are going to tighten down like a clamp so that this mess doesn’t happen again.

I may be wrong………….but chances are………..I’m correct or darn close to the timeline and percentages.

[Ex-SD]

Many of the foreclosures that are presently being sold are being bought by investors who believe that the present bust is just a temporary thing. When their “investments” are still sitting on the market for sale at the end of 2008, panic will set in. The man in the Tribune article is delusional if he believes that his property is not going to be worth less than he just paid for it within a couple of years. I guess it’s just human nature to look at things from a subjective viewpoint that suits your particular purpose. To me, it’s denial……..denial…………..denial, of the obvious! I am a retired CEO and I am less apt to become emotionally involved with a house or anything else other than my wife, family and dogs. To me, it’s a simple matter of balancing $$$$ and common sense to figure out what’s best for you and your family.

Anyone who really needs to sell their house who is holding out for their present asking price is deluding themselves each month that they don’t lower the price to move it NOW! When prices really start to fall, panic will set in and that’s when we’ll see just how far prices will drop. I’m guessing 25-40% for houses and 35-50% for condos.

I may be dead-wrong but with the inability of the present owners to refinance many of these properties………… due to their lack of equity in their respective properties / inability to get an appraisal that comes anywhere close to what they paid for the property two years ago / inability to make the payments when their 2-28 loan resets at a much higher interest rate / inability to find a willing buyer who can qualify for a mortgage under tighter credit regulations and more $$$$ needed for a down payment…………sellers are going to have a BIG problem moving their properties. Of course, for those who bought their houses before 1999-2000, didn’t use their house as a credit card and don’t have to sell……..they will still have a home in San Diego with no problems. They will just have missed an opportunity to cash out and rent or move to another state that offers much cheaper housing.

[Author]

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