[PD]

Sdrealtor, which markets are you saying peaked late 2004?

[PD]

When future analyst take a look at the numbers, the official peak will be the highest price paid, regardless of whether it was “too high.” When we measure the overall reduction, it will be from the actual recorded high. Further, every area I know about peaked between spring 2005 and fall 2005. Most peaked over the summer.

[PD]

Does anyone know of a SoCal area that did not have significant increases in value from 2004 to summer 2005?

[PD]

You’re right. However, it is a new development and could indicate a new trend.

[PD]

The last month has seen “Price reduced” signs materializing in Coronado. However, only a few months ago sellers were listing housing at prices that were hundreds of thousands of dollars above the last comp.

There is a area in Imperial Beach that is loaded with houses for sale. The strange thing is that it seems to be located in just one area. Other neighborhoods don’t seem to have as much for sale (although there is plenty).

I started tracking the listing prices in those areas. I only have data starting two weeks ago. It looks like there is a small downward trend in pricing but it could just be a natural fluctuation.

[PD]

Things are turning in Phoenix. We own a condo there with two other people and are trying to sell it….QUICK. My mother lives in a new community in the Phoenix area that only about 30% sold. Prices increased 50% last year. Every week she called me to tell me her house went up another 2k. Now her builder is offering all kinds of free upgrades so that they don’t have to drop the base price. I’m sure thata base price reduction is coming soon. For her sake, I hope I’m wrong.

[PD]

Emotion is a big player in prices. The purchasing of recent years has been a stampede of irrationality. Everybody and his dog were making a ton of money on their house without doing a thing. People went crazy and paid whatever they had to for fear they going to get priced out. When reality begins to sink in, the stampede is going to go the other way.

There has been a lot of irrationality among otherwise smart people. A relative of mine just paid 550K for a condo in the LA area. It was a first time purchase. They had to streeeetch to buy it. Then they put in a top of the line real wood floor and new stainless appliances even though the old ones worked just fine! These are very smart people but I’m worried about what is in store for them.

[PD]

If a person sees their dream home and are going to live there for a very long time, then they should buy. My husband and I almost made an offer recently on a house because the supply in that neighborbood with that view is very small (only about 8 houses). However, there were a few negatives with the house. In the end, we took the emotion out of it and did not make an offer because we think the price is going to drop significantly and the property was not perfect.

There is another variable that few people talk about that may affect prices. Are we in for a recession? Everyone talks about how jobs are good in SD. Well, they are good RIGHT NOW. What happens if we slide into a recession because of a steep retreat in spending? What will happen to the job market? The current prices are built on a house of cards. All it will take is a stiff wind.

[PD]

Sdduuuude’s comments about inflation were very interesting and a good addition to the forum. I took exception to his snide tone.
The truth is that we don’t know for certain how far down it will go. However, there are already some neighborhoods in San Diego that have seen over a 10% drop from the high already and it is just getting started.
I’ve posted before about a friend in Rancho Bernado. A very comparable house to theirs sold at the high for $650,000. Another comparable house went into escrow in February for $590,000.
Another friend in Rancho Bernado has their townhouse for sale at a good discount from the high and they don’t even have any nibbles. They say their street is awash in for sale signs. This is not going to stop at 15% for them. Their faces were quite grim when they told us about their situation. They are military and are moving in one month. How long will sit empty before they start slashing the price?

[PD]

Sdduuuude, I think everybody has a tendancy to focus on articles or figures that support their beliefs, including yourself.
One cannot argue with history, however. Every time there has been a significant runnup in housing prices to earnings, it has corrected to the mean.
I’m sure there were a lot of people in Japan who were saying the same thing you are, just before a very painful slide. Their propery values are now what they were 23 years ago.
You have the unpleasant tone of a person invested in real estate and unwilling to hear anything that would threaten your assets. Are you a realtor? Perhaps a deeply mortgaged homeowner?

[PD]

I wonder how much the internet is going to affect prices. Realtors no longer control the information (and it is harder for them to get people to believe the positive spin). The general public will have much greater access to information about scary markets as well as the bad news in their own market. I think this will stoke the fires. Just like Greenspan’s “irrational exuberance,” fear feeds on itself.

[PD]

I wonder if there are some big players who don’t want housing futures out there? The builders as well as NAR keep saying soothing things because they don’t want people to panic. Buyer confidence a large part of price movement, both upward and downward.

I am also wondering why there aren’t more big thinkers in the industry (schools, researchers) who are saying there will be a severe downturn. Maybe they are afraid of being wrong? Or want more evidence first?

[PD]

The realtor is totally ignoring the fact that foreclosures were selling at market prices because the demand was high and everyone expected rising prices. When demand falls and everyone starts to worry about falling prices, foreclosures will sell for less and less money.

[PD]

I just received my Coronado paper. There are a lot of “Reduced” notices splashed across real estate adds. Additionally, there is an area called the Cays with homes on the water. I have not seen one of those houses listed for under 1.79M in the last 16 months. One of those houses just listed for an even 1.7M. There are also a lot of notices of empty lots for sale with plans and approvals for a new home. The builders are spooked.

[PD]

I have not nailed down which ones I’m going to buy yet.

[Author]

Posts