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murray
ParticipantPwySlr
Yes I’m familiar with the Japan r/e collapse. Different situation though: Japan population aging / declining big time, banks were unwilling to write down bad loans, they don’t have millions of illegals sneaking into the country, etc. Also I read Harry Dent a long time ago – he says US will follow Japan. He claims it’s all demographics driven. Worth a read.ParticipantShouldn’t have to waste this space to explain again but here goes. My posts refer specifically to SFR resale median figures. Now read very s l o w l y and carefully until you comprehend it. Pay close attention to the last paragraph. Public schools…sheesh!
From SDUT 7/12/06:
Last month’s median home price dropped to $488,000, a 1 percent decline from a year earlier and a 6 percent decrease from last November’s peak of $518,000.
The median is the price at which half of all homes sold for more and half for less.
The median price for single-family homes, which represent a significant share of the housing market, reached $565,000, down slightly from May’s record price of $569,500, but up nearly 2 percent over a year ago June.Note to PowayS: Overall median price numbers are pulled down by condo conversions. Strip them out and SFR resales are stable.
ParticipantBubbleheads confused about the data. Again.
I rest my case.ParticipantWhere do you get your “it’s already 1/2 way there only a few months after the peak” data?
SFR resale median peak was May 2006. It’s only down $4.5k.
The sky is falling! The sky is falling!
You bubbleheads sure are entertaining.
Geez.ParticipantSure there are / will be declines in some areas. What about the >20% yoy INCREASES in other areas such as Allied Gardens etc (from yesterday’s UT article).
Again, I’m predicting ~10% decline in SD MEDIAN sfr resale prices over ~ 6 yrs. Could you eventually buy property in certain areas ie Escondido for >10% less than today’s prices? Absolutely. 50% off SD MEDIAN?…no way. I’ll take that $500 bet!
Just like the last downturn outlying areas ie Escondido & Temecula will soften first because of distance from major job centers… especially if gas is $5/gal! ;(
(Why does it take 10 min to post to this site? Server on dial up?)ParticipantSure there are / will be declines in some areas. What about the >20% yoy INCREASES in other areas such as Allied Gardens etc (from yesterday’s UT article).
Again, I’m predicting ~10% decline in SD MEDIAN sfr resale prices over ~ 6 yrs. Could you eventually buy property in certain areas ie Escondido for >10% less than today’s prices? Absolutely. 50% off SD MEDIAN?…no way. I’ll take that $500 bet!
Just like the last downturn outlying areas ie Escondido & Temecula will soften first because of distance from major job centers… especially if gas is $5/gal! ;(ParticipantAsking prices are irrelevant. You can ask whatever you want for property, houses, boats, cars etc but a free market determines the price it is sold at.
It’s pointless to highlight reduced asking prices unless of course the asking prices are less than past sales. More data is needed before this claim can be made.A 1 month decline of $4.5k (from the previous month’s historic high!) and 2% yoy INCREASE in resale sfr median prices hardly presages a 50% decline. Sure multi-million dollar sales are skewing the median but how is that such a negative for col.
ParticipantA 27% shaving off an unrealistic asking price to begin with isn’t a useful metric of market pricing action.
I believe the posting from a realtor who estimated 60% of inventory is overpriced and these sellers are not serious but will sell if someone offers them their inflated price. Others on this forum predict a large inventory drop after summer as these sellers allow their listings to expire and give up.
I’m going with history on my side. I don’t believe the upcoming r/e downturn “will be different this time”, ie massive price declines.
ParticipantAlso – Is the lowered tax rate on the full price of the new similar property? (What a deal!)
ParticipantI can’t disagree with any of your points. But it doesn’t matter, people want to live in SD. Yes demand will fluctuate but in the end people want to live in SD.
I don’t understand why people sacrifice so much to live in SD but they do. It doesn’t make sense to me, never has, but that’s what I’ve experienced.
50% decline just won’t happen because of the desire to live in SD and own SD r/e. Period.
ParticipantI lived in SD since 1981 (now currently renting in LA for 1.5 yr)… SD story has ALWAYS been the same: low wages & high cost of living. I scratched my head when houses were $130k, interest rates were high coupled with high unemployment(at times). No matter, the desire to live in SD is SO strong people will do ANYTHING to live there and will buy houses and put up with it. It amazes me. I don’t understand it. Wishing it weren’t so is just a waste of time.
No matter what the economic issue it ALWAYS boils down to supply and demand (with the acknowledgement that govnmnt will tinker with both). Until you take away the demand / desire for people to live in SD prices won’t drop much. Again, the only thing that will derail it would be massive unemployment like in the early 90s.
fyi – SD r/e is a bargain compared to LA.
ParticipantAs I stated there are far fewer Tierrasanta rental SFRs available to rent compared to past years. Previously an average weekend SDUT ad would contain 6-8 sfrs for rent, now maybe only 3-4 (combined UT & CL). These are averages, actual numbers vary seasonally. Combined with the current buyer-seller standoff, low rental inventory will support higher rents for the next ~2 years.
My moderate ~10% r/e median price (clarification:RESALE sfrs) downturn prediction is based on these factors:
– oos boomers retiring to SD area
– ballooning new construction material costs
– general pent up desire to buy (especially bubbleheads!)
– minimal new home construction
– resistance to urban infill densification
– limited cheap land to build on
– demand from natural population increase
– higher rents justifying purchases (in a few years)
– current sellers allowing listings to expire thus reducing inventory, helping to maintain a price “floor” (it’s estimated currently 60% of listings are frivolous)
– exit of flippers from r/e market back to their previous jobs
– exit of investors from r/e market back into stock market
– but mostly because NAR predicts no decline and bubbleheads doom & gloom.The correction will take years to play out.
The early 90s had defense industry decline with massive SoCal unemployment and r/e median prices declined ~15% in SD and >20% in LA. The early 90s CA economic decline was second only to the great depression!! SD county employment is now diverse so employment hits like the Nokia shutdown (1100?) can easily be absorbed.
A contrarian case for INCREASING house prices: major (world?) war(s) requiring unprecedented defense spending/jobs buildup in SoCal. Pray it doesn’t happen.
ParticipantAs an owner of 3 SFR rental properties (all located in Tierrasanta) I watch the market like a hawk to gage rents and rental property inventory. My primary sources are Craigslist and the SDUT.
I noticed the number of properties offered for rent in Tierrasanta shift late last summer, soon after I rented out 1 of my rental SFRs. I believe what has happened is the flippers/investors stopped buying properties and offering them for rent, thus reducing the number of properties for rent.
I’ve been “landlording” since 1989 and I have NEVER seen such a dramatic shift in Tierrasanta rental inventory as this – I can’t speak for other areas. The demand side is strong too – I contacted various property owner/advertisers who confirm that demand is strong.
When interviewing potential tenants last summer 1 couple had just sold their SD house and wanted to rent for awhile, another couple same deal but wanted a short lease because they had plans to move out of state. The couple I eventually rented to were from out of state and had a combined income of >$150k but didn’t want to buy in an over inflated market.
In my other SFR, 1 couple with kids moved in from AZ and kept their AZ house with the intention of renting it. Now they are wanting to sell it and having a very difficult time finding a buyer.
In my other SFR, a couple sold their SD house at what they thought was the peak (back in 2002) and rented from me with intention to buy a SD house later when prices declined.I have older friends who have been in the SD investor/ landlording business a very long time (ie buying Clairemont SFR repos for $18k in the early 60’s) and have witnessed market up and downs but even they are freaked out by what they see is the INCREDIBLE speculation of the past few years. FWIW they predict a 40% decline in property values.
My predictions (baring major wars, economic collapse etc):
Prices: median prices “sideways” – flat to down (~10% max) over the next ~6 years.
Rents: 5% – 8% increases for next couple of years only. -
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