So just looking around at So just looking around at condo’s, houses, and have been following them closely for nearly 3 years now, and I’m wondering if we hit a bottom within the next 2 years what do you think the pricing will look like? I’m thinking somewhere around 01-02 pricing, but of course that’s just a guess a best. Any one else.
sdrealtor
January 4, 2011 @
1:21 PM
This is meaningless. I This is meaningless. I already have put very good deals together belwo year 2000 and others at 2003 pricing. There is so much involved its impossible to put a single number like that on things across the board.
pemeliza
January 4, 2011 @
2:30 PM
If you read the question as If you read the question as saying all properties in San Diego county will be trading at or below year 200x pricing then I think the question makes sense.
Why don’t you add a response that says above 2002 pricing which would mean that at the bottom there will still be some properties trading at 2003 price levels or higher.
SD Realtor
January 4, 2011 @
3:04 PM
If you think things will hit If you think things will hit bottom in 2 years you are misguided. If you really want to know what the housing market will do then watch the bond market. I think that we will need to see the timing of the bond mmarket in order to think about bottoms. However the correrlation between bond yields rising and prices falling will not be symmetrical. The govt has already displayed that they can manipulate the market well enough to deal with forclosures.
Anonymous
January 4, 2011 @
4:22 PM
sdrealtor wrote:This is [quote=sdrealtor]This is meaningless. I already have put very good deals together belwo year 2000 and others at 2003 pricing. There is so much involved its impossible to put a single number like that on things across the board.[/quote]
Except that is pretty much what Rich does on the front page all the time.
Ever notice those graphs?
There’s one one the bottom right of this page.
sdrealtor
January 4, 2011 @
4:49 PM
pri_dk wrote:sdrealtor [quote=pri_dk][quote=sdrealtor]This is meaningless. I already have put very good deals together belwo year 2000 and others at 2003 pricing. There is so much involved its impossible to put a single number like that on things across the board.[/quote]
Except that is pretty much what Rich does on the front page all the time.
Ever notice those graphs?
There’s one one the bottom right of this page.[/quote]
And no offense to Rich (and I’m sure he knows this also) those graphs are pretty meaningless to an individual buyer. It all depends up where and what you are buying. Graphs are nice for websites and articles but there is no point in time that is a bottom where every home simultaneously would sell at the lowest price possible. I am closing a house tomorrow at a price that could be a 1999/2000 price. It is a prime custom built home on a large lot west of the 5. For my client the bottom is TOMORROW!
Anonymous
January 4, 2011 @
5:03 PM
sdr,
I’m pretty sure that you sdr,
I’m pretty sure that you are the only Pigg that uses this forum to brag about personal “accomplishments.”
It’s kinda cute.
But I’m glad there is only one like you. It would get pretty cluttered here if everyone on this site made a posting every day they performed at their job.
sdrealtor
January 4, 2011 @
5:09 PM
glad you enjoy it. just glad you enjoy it. just keeping it real as opposed to talking ivory tower
Eugene
January 4, 2011 @
5:31 PM
sdrealtor wrote:I am closing [quote=sdrealtor]I am closing a house tomorrow at a price that could be a 1999/2000 price. It is a prime custom built home on a large lot west of the 5. For my client the bottom is TOMORROW![/quote]
I suppose, the more custom and the more unique the house is, the harder it is to find close comps, the harder it is to pinpoint the bottom.
On the other hand, homogeneous cookie-cutter neighborhoods can have well-defined bottoms and we can talk about year 200x prices.
To take this cookie-cutter neighborhood in your backyard
$505,000 for a 3/3 twinhome. I posit that the 2002 price for this house would be in the 300’s, the 1999/2000 price would be in the high 200’s, and there were no real arms-length sales anywhere near the 1999/2000 price in this neighborhood in the last five years. And this will be true for 9 out of 10 cookie-cutter neighborhoods in NCC.
So, we can say quite truthfully and generally that NCC is at the present time at 2004 prices, with occasional exceptions.
SD Realtor
January 4, 2011 @
6:42 PM
Eugene I believe that the Eugene I believe that the lost decade of Japan was characterized by zero growth. However, and you can correct me if I am wrong, the debt level that we have is staggering as compared to the debt level of Japan at that time.
The elephant in the room that everyone continues to ignore is the percentage of our gdp that is being used to simply service the debt at CURRENT interest levels. If you look at predictions of how much that will grow in the next several years it becomes quite scary. Those predictions also do not take into account interest rate hikes because if that happens things can lose control quickly.
As to the thoughts that as long as the world believes the US will not default we will all be okay and they will continue to finance our debt and lifestyle, I think that quite the opposite is true. I believe that it is universally believed that we indeed will default at aome point and until there is a clarification of what the new order will be like, and that those growing economies are still very dependent on our out of control consumerism, there simply is no choice. Additionally the new world creditors, IE China is simply taking our worthless dollars and siphoning them into commodity purchases, oil, natural gas, pretty much any natural resource they can get their hand on.
In the end I believe that the only similarity between the lost decade of Japan and the current US of today is the lack of any growth. I am not saying we cannot plod along several more years in the same manner with low rates. I am saying that at some point there will be a turn of events with rates. It doesn’t matter if it is forced upon us by our creditors. It doesn’t matter if we finally get our ass in gear and hike taxes in a big way and get spending under control and tighten the money supply. It WILL happen at some point and credit WILL be hard to come by. Maybe in 2 years, maybe in 5 maybe in 10.
I would be more then happy to entertain ideas of another way out.
Eugene
January 4, 2011 @
7:24 PM
Quote: I believe that the [quote] I believe that the lost decade of Japan was characterized by zero growth. However, and you can correct me if I am wrong, the debt level that we have is staggering as compared to the debt level of Japan at that time[/quote]
Japan entered the lost decade with debt of 70% of GDP, and that quantity just grew and grew and around the time of 9/11 they were above 150% of GDP. It never bothered the creditors. After 20 years of deficit spending and debt to GDP growth, their interest rates are lower than ours.
[quote] the percentage of our gdp that is being used to simply service the debt at CURRENT interest levels. If you look at predictions of how much that will grow in the next several years it becomes quite scary.[/quote]
1.2% of GDP in 2010. Worst case scenario, it could climb to 4% of GDP.
There is certainly a way out. It should not be particularly difficult to balance the budget once the economy is back to full employment. Ending one of two wars and ending Bush tax cuts for the rich should do it. (Whether that will actually happen, is mostly a matter of politics.) At that point, simply holding the deficit to zero will whittle away the debt to GDP ratio because of GDP growth and inflation. We could get down to 60% debt to GDP by 2020 (down from 93% today) by balancing the budget by 2013 and keeping zero deficit and 3%/year inflation from that point.
SD Realtor
January 4, 2011 @
8:09 PM
I guess we disagree on the I guess we disagree on the way things started. At the onset of the lost decade, Japan was actually the worlds largest creditor nation. Japan was also (at the time) a pretty large exporter of goods. The unemployment statistics in Japan through the late 80’s and 90’s was what, under 3%? It did not climb over 3% until 1995 and didnt climb over 4% until 1998. So our employment situation is much worse, our debt to gdp level is much higher, and while Japan entered the lost decade as the worlds leading creditor we are entering the lost decade as the worlds largest debtor nation. What is also true is that there is a stark difference in culture. We have been bred to consume and to spend and the Japanese have not.
The other elephant in the room which is conveniently ignored are the entitlement programs. Even with NO wars you would be hard pressed to admit that there is going to need to be a solution to these issues.
From the tax cut perspective, I entirely agree that repeal of all of the Bush era tax cuts across the board will be an essential component to recovery. Still though, I think the chips are stacked against us in many ways. I agree with you that we are in a deflationary period that shares many of the same symptoms of the lost decade. We may indeed remain in that mode for the same amount of time, however I still believe higher rates will happen, perhaps very high.
I guess we will see.
Eugene
January 4, 2011 @
10:27 PM
Quote:At the onset of the [quote]At the onset of the lost decade, Japan was actually the worlds largest creditor nation. Japan was also (at the time) a pretty large exporter of goods.[/quote]
Japan was running budget deficits continuously since the early 70’s.
The USA has been and still is a major exporter of goods. Don’t underestimate the ability of Americans to work and produce. The manufacturing sector has been depressed because of Chinese currency manipulation, but Americans are still by far more productive than the Chinese, and they will reestablish themselves as soon as the Chinese central bank stops the manipulation (which it will have to, sooner or later).
And if you think that Americans are unique in their ability to consume and spend, you’re deeply mistaken. Americans don’t hold a candle to emerging nations. In the US, with its protestant roots and static socioeconomic stucture, conspicuous consumption is generally disapproved. Asians have no such compunctions. Mainland China is currently the largest worldwide market for Omega watches. The USA is not even close. Not because the Chinese people are all so rich (I’m sure that most people reading this could afford a $2000 watch), but because they care about these things. China is the third largest market for Porsches, and sales are rising so fast that they will be #1 in a few years. That’s despite the fact that Porsche charges absolutely insane prices in China (basic Porsche Boxster goes for the equivalent of $110,000, the 8-cylinder Cayenne S costs $220,000). And, of course, they are not buying all that with cash.
I would go as far as say that the only one doing any real saving in Asia is the Chinese communist government. Everyone else is on a massive shopping spree.
[quote]Once you move up the food chain things change. The higher you go, the more they change. So while you can truthfully say NCC is at 2004 prices you would truthfully be wrong in more cases than not.[/quote]
If I would be wrong in more cases than not, then surely you would find it easy to produce at least two homogeneous neighborhoods where I would be wrong.
Here’s another random example, further up the food chain, and this time with explicit 2004 and 2000 sales, and clearly I’m right in this neighborhood too:
Eugene
You did the exact same Eugene
You did the exact same thing again. Yes that is a higher price but it is bottom of the barrel entry level for that neighborhood (Del Mar). It also appears to have been very substantially remodelled since 2004.
Move up the chain in a given neighborhood and you will see what I am saying.
sdrealtor
January 4, 2011 @
8:21 PM
Eugene
Great example and Eugene
Great example and hopefully one I can address through the haze of the wine I just drank. The house my client bought is extremely hard to comp but is defintely selling at least 40% below the peak and under 2001 pricing. My client is far more nearish than anyone on this board and he thinks its a deal of a lifetime.
Now on to Summerhill. I sold a townhouse a block away from them in late 1999 and actually has considering a move up to one of these twinhomes so I know them intimately. I’m very conservative and when I did make my move in 1999 it was a huge step out of my comfort zone to move up as much as I did but someone I respect and consider a mentor told me it was the right thing to do and he was right. In late 1999/early 2000 that would efeintely have sold in the high 200’s but it is low end entry level Encinitas. The demographics of who will live in Encinitas has changed pretty dramiatically since 1999 and you wont see those prices ever again. It is actually one of the 3 neighborhoods I hung my hat on when I mad my bet with CAR in 2007 because of that very belief. Once you move up the food chain things change. The higher you go, the more they change. So while you can truthfully say NCC is at 2004 prices you would truthfully be wrong in more cases than not.
andymajumder
January 4, 2011 @
3:16 PM
Complete meaningless question Complete meaningless question – the bottom price will also be different in different parts of the county…in Carmel Vally it maybe 2003 nominal prices, in Scripps Ranch it maybe 2002, San Marcos – 2001 nominal prices whereas in some other areas we may see 2000 nominal prices….morever the financing cost also plays a big role…so comparing nominal prices may also be meaningless. Somebody who managed to get 2002 nominal prices at a really low interest rate (lets say 30yr fixed at 4.25) is actually getting a much better deal than anyone in 2002 at similar price.
pemeliza
January 4, 2011 @
3:33 PM
I think the mortgage market I think the mortgage market has been effectively nationalized so I would not expect too much movement in rates over the next 5-10 years.
Good points Andy. One thing about the 2002 buyer though is that assuming they put money down and did not spend their equity, they could have refinanced down to the same 4.25 rate but that would mean many more years of payments because you don’t pay much principal the first 8 years.
Carmel Valley seems like an outlier.
SD Realtor
January 4, 2011 @
4:23 PM
Pem are you serious? You Pem are you serious? You really do not see much movement in rates over the next 5-10 years? So you feel that all of our creditors and out debt will not command a much higher interest rate as time moves forward?
Can I ask what makes you think that?
Eugene
January 4, 2011 @
4:35 PM
Quote:So you feel that all of [quote]So you feel that all of our creditors and out debt will not command a much higher interest rate as time moves forward? [/quote]
They have not for Japan, why should they for us?
no_such_reality
January 5, 2011 @
12:41 PM
Eugene wrote:Quote:So you [quote=Eugene][quote]So you feel that all of our creditors and out debt will not command a much higher interest rate as time moves forward? [/quote]
They have not for Japan, why should they for us?[/quote]
Japan has a very different culture. One that emphasizes repaying your debt. People struggled that entire lost decade to repay the loans on homes that were ill suited to them, in which they were underwater, in which their payment financially crippled them. Do you see Americans doing that? I don’t.
The bottom is in the future. I suspect it will be at ~3-3.5x incomes. Whether that is above below peak pricing will depend on inflation and frankly, we will inflate out of this.
Gas prices will not be getting cheaper.
Food prices will not be getting cheaper.
Commodities will not be getting cheaper.
Your phone apps might get cheaper. But in aggregate, I suspect you’ll see increasing phone bills too.
I don’t think these will be little tame increases either. They’ll stay relatively tame, i.e. 2-3%. in the near term as long as unemployment is pushing 10%. I suspect we’ll have 10% unemployment for a very long time. The slack however in the commodities markets for foods and fuels is gone. Simple population growth will push them up dramatically.
Keep in mind that the Government inflation numbers are heavily weighted by housing (40%). And the near flat inflation is cause by housing essentially counter balancing increases in everything else.
Then there is how California will solve it’s budget problem. Unless someone has a Djinn to pull out, I don’t think either baseline solution of spending cuts or tax increases will make housing better and may further harm business in the State.
And of course, there is the Federal question. What will happen in two years? How will the Fed balance it’s budget? How will the Fed balance it’s Social Security hole?
The more I look, the more I see potential black swans and shocks to the market. An end to MID? A massive Tax overhaul? Social Security means testing? An American Debt Crises? The unthinking is becoming thinkable for a couple reasons. The politicians haven’t dealt with it in 40 years and the politicians don’t think, they play partisan games only thinking of the next election.
I still think we’re headed for the repeat. Say hello to stagflation, it’s coming back… What will you do when things like food are going up 15%+ a year and the job market is like today’s?
CA renter
January 5, 2011 @
9:44 PM
no_such_reality wrote:Eugene [quote=no_such_reality][quote=Eugene][quote]So you feel that all of our creditors and out debt will not command a much higher interest rate as time moves forward? [/quote]
They have not for Japan, why should they for us?[/quote]
Japan has a very different culture. One that emphasizes repaying your debt. People struggled that entire lost decade to repay the loans on homes that were ill suited to them, in which they were underwater, in which their payment financially crippled them. Do you see Americans doing that? I don’t.
The bottom is in the future. I suspect it will be at ~3-3.5x incomes. Whether that is above below peak pricing will depend on inflation and frankly, we will inflate out of this.
Gas prices will not be getting cheaper.
Food prices will not be getting cheaper.
Commodities will not be getting cheaper.
Your phone apps might get cheaper. But in aggregate, I suspect you’ll see increasing phone bills too.
I don’t think these will be little tame increases either. They’ll stay relatively tame, i.e. 2-3%. in the near term as long as unemployment is pushing 10%. I suspect we’ll have 10% unemployment for a very long time. The slack however in the commodities markets for foods and fuels is gone. Simple population growth will push them up dramatically.
Keep in mind that the Government inflation numbers are heavily weighted by housing (40%). And the near flat inflation is cause by housing essentially counter balancing increases in everything else.
Then there is how California will solve it’s budget problem. Unless someone has a Djinn to pull out, I don’t think either baseline solution of spending cuts or tax increases will make housing better and may further harm business in the State.
And of course, there is the Federal question. What will happen in two years? How will the Fed balance it’s budget? How will the Fed balance it’s Social Security hole?
The more I look, the more I see potential black swans and shocks to the market. An end to MID? A massive Tax overhaul? Social Security means testing? An American Debt Crises? The unthinking is becoming thinkable for a couple reasons. The politicians haven’t dealt with it in 40 years and the politicians don’t think, they play partisan games only thinking of the next election.
I still think we’re headed for the repeat. Say hello to stagflation, it’s coming back… What will you do when things like food are going up 15%+ a year and the job market is like today’s?[/quote]
Totally agree with all of this. Good post.
Anonymous
January 4, 2011 @
4:38 PM
Bond yields are a function of Bond yields are a function of many things.
If people continue to think that chances of default are zero, and that other investments are risky, bond yields will stay low.
Since the US can print dollars, the risk of default will probably continue to be as close to zero as it always has.
Inflation risk is real, but it is more complicated than “printing money leads to inflation.”
Other investments may continue to be risky (stock market is almost certainly overvalued), making bonds *relatively* safe.
So there are lots of reasons to argue that bonds will stay where they are for a long time.
(I know that smarter people than me have argued that this will not happen, but this does not discount the fact that there are logical arguments that it *can* happen. So there’s no need to rehash the inflation debate here…)
briansd1
January 4, 2011 @
4:07 PM
andymajumder wrote:Complete [quote=andymajumder]Complete meaningless question – the bottom price will also be different in different parts of the county…in Carmel Vally it maybe 2003 nominal prices, in Scripps Ranch it maybe 2002, San Marcos – 2001 nominal prices whereas in some other areas we may see 2000 nominal prices….morever the financing cost also plays a big role…so comparing nominal prices may also be meaningless. Somebody who managed to get 2002 nominal prices at a really low interest rate (lets say 30yr fixed at 4.25) is actually getting a much better deal than anyone in 2002 at similar price.[/quote]
It also depends if you’re talking inflation adjusted or not.
Nominal price wise, different neighborhoods will do better than others. But over time, perhaps decades, inflation adjusted, the proportional equilibrium will be restored (not necessarily all at the same time).
If you buy in a neighborhood or region that is holding up better, you may experience longer stagnation in prices.
Eugene
January 4, 2011 @
4:47 PM
Quote:Complete meaningless [quote]Complete meaningless question – the bottom price will also be different in different parts of the county…[/quote]
Yep … Relative attractiveness of different areas changes over time. The difference between 2000 and 2002 is something like 20%. It is not inconceivable that the market changes sufficiently in ten+ years, that two houses in different parts of the county that were equally priced in 2000 are now fairly valued 20% apart.
Also, it does not make sense to refer to the bottom in the future tense, when it is already two years behind us.
Tillers
January 4, 2011 @
4:25 PM
I think house prices still I think house prices still have a long way to go. Many people are still in the mindset that a house is going to go up 25% year after year, rather than viewing it first as a place to live. People need to buy what they can afford now, not what they can afford in three years when they hope the house will be “worth” much more.
patientrenter
January 4, 2011 @
4:37 PM
Tillers wrote:I think house [quote=Tillers]I think house prices still have a long way to go. Many people are still in the mindset that a house is going to go up 25% year after year, rather than viewing it first as a place to live. People need to buy what they can afford now, not what they can afford in three years when they hope the house will be “worth” much more.[/quote]
I agree.
However, as long as China is happy to buy US financial assets in return for making everything we need, house prices will stay very high compared to long term historical norms.
Some day, we may realize that we will be better off with public policy that makes housing into shelter, not a several hundred thousand dollar throw of the dice in a casino. But that day is not even on the horizon now.
briansd1
January 4, 2011 @
6:48 PM
patientrenter wrote:Tillers [quote=patientrenter][quote=Tillers]I think house prices still have a long way to go. Many people are still in the mindset that a house is going to go up 25% year after year, rather than viewing it first as a place to live. People need to buy what they can afford now, not what they can afford in three years when they hope the house will be “worth” much more.[/quote]
I agree.
However, as long as China is happy to buy US financial assets in return for making everything we need, house prices will stay very high compared to long term historical norms.
Some day, we may realize that we will be better off with public policy that makes housing into shelter, not a several hundred thousand dollar throw of the dice in a casino. But that day is not even on the horizon now.[/quote]
Actually, aside from the coastal areas, houses in America are the lowest in the developed world, even lower than in China.
I see the high-cost coastal areas stagnating while the proportional differences return to long term trends.
Eugene
January 4, 2011 @
8:06 PM
briansd1 wrote:Actually, [quote=briansd1]Actually, aside from the coastal areas, houses in America are the lowest in the developed world, even lower than in China.[/quote]
Yep. There are cities all over Asia with higher prices per square foot than San Diego. In Bangkok, $200/sf is considered “middle market” and $450/sf is considered “luxury”. New construction in Shanghai averages $300/sf. Taipei averages $400/sf. Seoul and Hong Kong are, I believe, above $600/sf.
And if you look at price to income or price to GDP ratios, it becomes hard to find any developed country cheaper then the US.
Asians took a good close look at our American consumerism, and liked it so much that they built a bigger and better version of consumerism of their own.
(former)FormerSanDiegan
January 5, 2011 @
8:05 AM
Does everyone still think Does everyone still think “the bottom” is in the future ?
NotCranky
January 5, 2011 @
8:13 AM
FormerSanDiegan wrote:Does [quote=FormerSanDiegan]Does everyone still think “the bottom” is in the future ?[/quote]
If anything,yes, because it is here today, more or less, and will be tomorrow,also so more or less. I couldn’t really get that worked up about it if I tried…seems like quibbling.
sdrealtor
January 5, 2011 @
11:34 AM
I’ve said it before and I I’ve said it before and I will say it again. there is no such thing as a bottom defined by a single point in time when all homes will sell at the lowest price. there is only a period of time where you can go out and create your own bottom by getting the lowest possible price on a home you want. IMO we are in that time period. How long it will last is another matter and one I dont know. I do beleive it will persist another couple years.
Anonymous
January 5, 2011 @
12:01 PM
We get it.
We understand that We get it.
We understand that we are talking about aggregates.
We understand the limitations of using aggregates in making personal financial decisions.
We’re ok with that.
We also understand that the guy with “realtor” in his name thinks that now is always the right time to buy/sell real estate.
We know that this will always be the case, so there’s really no need to repeat it constantly.
We get it.
Do you get it?
sdrealtor
January 5, 2011 @
2:31 PM
pri_dk wrote:We get it.
We [quote=pri_dk]We get it.
We understand that we are talking about aggregates.
We understand the limitations of using aggregates in making personal financial decisions.
We’re ok with that.
We also understand that the guy with “realtor” in his name thinks that now is always the right time to buy/sell real estate.
We know that this will always be the case, so there’s really no need to repeat it constantly.
We get it.
Do you get it?[/quote]
You couldnt be MORE wrong. For the last 6 years I have been saying NOW IS NOT the time to buy for most people. Everyone on this board stands witness to that as do the archives of my posts. It has taken me a very long time to get comfortable with this but for the first time since at least early 2003 I think NOW it truly is a good time to buy for MOST people.
scaredyclassic
January 5, 2011 @
2:33 PM
I made decent money stocking I made decent money stocking up on sardines last year which I eat most days. Go long sardines and other canned fish
stockstradr
January 6, 2011 @
12:03 AM
You couldnt be MORE wrong. You couldnt be MORE wrong. For the last 6 years I have been saying NOW IS NOT the time to buy for most people. Everyone on this board stands witness to that as do the archives of my posts. It has taken me a very long time to get comfortable with this but for the first time since at least early 2003 I think NOW it truly is a good time to buy for MOST people.
sdrealtor, Let me get this straight. We all know San Diego housing market bottomed around March 2009, but you advised that WAS NOT THE TIME to buy. And you’re apparently proud of that shitty advice.
Then markets popped up in San Diego about 15%. You still said that WAS NOT THE TIME to buy. ON that count, you were right…
Because today, we’re looking back at FOUR solid months of housing prices retreating back down in double dip fashion, with prices already caved back down to within 5% of the March ’09 bottom (Here I’m making some assumptions about the yet to arrive Nov and Dec Case-SHiller data)
and NOW you tell us “..I think NOW it truly is a good time to buy for MOST people.”
Look, I like your previous posts in other threads on other topics, but you sound like a moron in this post. I don’t believe you are a moron, I just believe you are another Realtor proving Realtors are the WORST out of everyone when it comes to predicting where housing prices are going.
If I would have listened to my San Diego Realtor’s advice to NOT sell my homes – at a time which turned out to be top of the bubble, it would have cost me half a million dollars. I ignored her shitty advice, and avoided losing the half-million.
sdrealtor
January 6, 2011 @
12:19 AM
Obviously you dont have this Obviously you dont have this straight. First off we dont all know the market bottomed in March 2009. What bottomed in March 2009 was the prices on the worst properties and there was lots of them being sold as the subprime properties were liquidated hence the median was at its lowest point. In March 2009 I never said now was not the the time to buy, I said there were opportunities out there but was nowhere near ready to make a blanket statement like I recently have. I needed more evidence of reaching some sort of stability.
Today you are looking at prices dropping the last few months due to a secular cycle that occurs nearly every year. Talk to me in May when that same secular cycle powers prices back upward.
You know I am not a moron and I thought long and hard before being ready to make as strong as a statement as I have recently made. This Realtor has consistently proven that he has been spot on on predicting housing prices and all you have to do is comb through the archives of this site to verify that. Similarly we could comb through those archives to find your stock trading predictions were …ummmm….not too good?
If I would have listened to your investment advice I would have lost a fortune but not half a million. Ironically her sitty advice would not have cost you half a million because what you sold (a shitty 3BR condo in RB) was never worth half a million and we know you are making up that you would have lost half a million on it. Sorry no room for liars here.
I stand by my opinion that for MOST buyers now is the time to be out there looking to find those rare great opportunites that while not easy to find can be found.
ocrenter
January 6, 2011 @
1:08 AM
It has been a good time to It has been a good time to buy since late 2008. As long as one concentrate their efforts on foreclosures/short sales/builder inventories outside of the 10-minute-to-beach-strip along the coast.
OwnerOfCalifornia
January 6, 2011 @
10:47 AM
ocrenter wrote:It has been a [quote=ocrenter]It has been a good time to buy since late 2008. As long as one concentrate their efforts on foreclosures/short sales/builder inventories outside of the 10-minute-to-beach-strip along the coast.[/quote]
Well I guess you can rule out Santee.
sdrealtor
January 6, 2011 @
11:57 AM
flinger wrote:ocrenter [quote=flinger][quote=ocrenter]It has been a good time to buy since late 2008. As long as one concentrate their efforts on foreclosures/short sales/builder inventories outside of the 10-minute-to-beach-strip along the coast.[/quote]
Well I guess you can rule out Santee.[/quote]
I Love it! A classic by a longtime lurker
briansd1
January 5, 2011 @
12:14 PM
sdrealtor wrote:I’ve said it [quote=sdrealtor]I’ve said it before and I will say it again. there is no such thing as a bottom defined by a single point in time when all homes will sell at the lowest price. there is only a period of time where you can go out and create your own bottom by getting the lowest possible price on a home you want. IMO we are in that time period. [/quote]
Yes I agree.
Depending on the market, such as Downtown San Diego, Point Loma, La Jolla, Del Mar, I believe that you will get better choices by waiting.
I personally would wait until winter 2011. The art of the deal is more important to me than finding a nest for the family.
[quote=sdrealtor]
How long it will last is another matter and one I dont know. I do beleive it will persist another couple years.[/quote]
Another couple years sounds about right. Longer if interest rates shoot up as SD Realtor seems to believe.
sdrealtor
January 5, 2011 @
2:29 PM
Brian
The problem with Brian
The problem with waiting until Winter 2011 is that just because you will be ready the house you want may not be. Most people are pretty particular in what they want in a home. Getting a great price does not make a great deal if you dont get a great home also. Even if you plan to wait and you arent looking now you may not even recognize a great opportunity in Winter 2011 and wont be preapred to move fast or decisvely enough to capitalize on it.
(former)FormerSanDiegan
January 5, 2011 @
3:18 PM
sdrealtor wrote:Brian
The [quote=sdrealtor]Brian
The problem with waiting until Winter 2011 is that just because you will be ready the house you want may not be. Most people are pretty particular in what they want in a home. Getting a great price does not make a great deal if you dont get a great home also. Even if you plan to wait and you arent looking now you may not even recognize a great opportunity in Winter 2011 and wont be preapred to move fast or decisvely enough to capitalize on it.[/quote]
Wait a minute…
It is currently Winter.
It is currently 2011.
… so why do we have to wait for Winter 2011 when that is the present ?
stockstradr
January 5, 2011 @
12:49 PM
I believe many areas will see I believe many areas will see new lows, lower than the lows of 1st Qtr 2009
Hitting that bottom will occur when all the cans in play can no longer be kicked down the road.
In other words, the world finally loses faith in the US Dollar, plus our government exhausts the limits of mitigating that through buying its own treasury securities at its own auctions. Plus the US government is forced to devalue the currency in order to afford to service foreign debt. Thus interest rates on everything from treasury securities to mortgages go UP dramatically, and also you have US government no longer insuring mortgages and Fanny/Freddie have been reformed (so mortgages now must all be insured and purchased by private sector). And of course, banks can no longer hold back the final and second massive wave of foreclosures, so banks release shadow inventory onto the housing market.
When all those factors come into play, we’ll finally see the bottom.
But it could easily be five years before we see that.
When all that happens, I believe that bottom will be AT LEAST an additional 15% lower (REAL, not nominal pricing) than the housing price lows of 1st Qtr 2009
Coronita
January 6, 2011 @
4:11 AM
LOL…omg…. With all due LOL…omg…. With all due respects, this thread is sounding like how some phd’s think. Analysis to paralysis…
Are folks really still trying to predict when the bottom is going to occur? Have we not yet figured out that there is plenty of government intervention that will make this ultimately unpredictable?
Look around…Government intervention everywhere. And it’s not going to stop…In fact, we’ll see more of it….they’re doing just that in the equities market right now. Look around. Web 3.0 is here again…Facebook IPO, LinkedIn pending IPO…………We’re baaaaaaaaaaaaaack……
Rinse and repeat.
andymajumder
January 6, 2011 @
11:56 AM
flu wrote:LOL…omg…. With [quote=flu]LOL…omg…. With all due respects, this thread is sounding like how some phd’s think. Analysis to paralysis…
Are folks really still trying to predict when the bottom is going to occur? Have we not yet figured out that there is plenty of government intervention that will make this ultimately unpredictable?
Look around…Government intervention everywhere. And it’s not going to stop…In fact, we’ll see more of it….they’re doing just that in the equities market right now. Look around. Web 3.0 is here again…Facebook IPO, LinkedIn pending IPO…………We’re baaaaaaaaaaaaaack……
Rinse and repeat.[/quote]
Exactly….who would have thought back in March 2009 that stock markets would double in less than two years and get back to the pre crash levels…Nasdaq has more than doubled…of course this is the after effect of tremendous amount of money pumped in by Fed. Fed and treasury were probably even buying equities in 2009 to prop up the markets and boost sentiment.
If home prices keep going down, who are the biggest losers, the big banks. Do you think banks will just sit and watch that…we all know they have the politicians in their pockets (doesn’t matter which party) and the Fed will find ways to prop things up and they can keep printing money, so all this talk of 25-30% further drop in nominal prices is wishful thinking. It’s not happening….
January 4, 2011 @ 1:18 PM
So just looking around at
So just looking around at condo’s, houses, and have been following them closely for nearly 3 years now, and I’m wondering if we hit a bottom within the next 2 years what do you think the pricing will look like? I’m thinking somewhere around 01-02 pricing, but of course that’s just a guess a best. Any one else.
January 4, 2011 @ 1:21 PM
This is meaningless. I
This is meaningless. I already have put very good deals together belwo year 2000 and others at 2003 pricing. There is so much involved its impossible to put a single number like that on things across the board.
January 4, 2011 @ 2:30 PM
If you read the question as
If you read the question as saying all properties in San Diego county will be trading at or below year 200x pricing then I think the question makes sense.
Why don’t you add a response that says above 2002 pricing which would mean that at the bottom there will still be some properties trading at 2003 price levels or higher.
January 4, 2011 @ 3:04 PM
If you think things will hit
If you think things will hit bottom in 2 years you are misguided. If you really want to know what the housing market will do then watch the bond market. I think that we will need to see the timing of the bond mmarket in order to think about bottoms. However the correrlation between bond yields rising and prices falling will not be symmetrical. The govt has already displayed that they can manipulate the market well enough to deal with forclosures.
January 4, 2011 @ 4:22 PM
sdrealtor wrote:This is
[quote=sdrealtor]This is meaningless. I already have put very good deals together belwo year 2000 and others at 2003 pricing. There is so much involved its impossible to put a single number like that on things across the board.[/quote]
Except that is pretty much what Rich does on the front page all the time.
Ever notice those graphs?
There’s one one the bottom right of this page.
January 4, 2011 @ 4:49 PM
pri_dk wrote:sdrealtor
[quote=pri_dk][quote=sdrealtor]This is meaningless. I already have put very good deals together belwo year 2000 and others at 2003 pricing. There is so much involved its impossible to put a single number like that on things across the board.[/quote]
Except that is pretty much what Rich does on the front page all the time.
Ever notice those graphs?
There’s one one the bottom right of this page.[/quote]
And no offense to Rich (and I’m sure he knows this also) those graphs are pretty meaningless to an individual buyer. It all depends up where and what you are buying. Graphs are nice for websites and articles but there is no point in time that is a bottom where every home simultaneously would sell at the lowest price possible. I am closing a house tomorrow at a price that could be a 1999/2000 price. It is a prime custom built home on a large lot west of the 5. For my client the bottom is TOMORROW!
January 4, 2011 @ 5:03 PM
sdr,
I’m pretty sure that you
sdr,
I’m pretty sure that you are the only Pigg that uses this forum to brag about personal “accomplishments.”
It’s kinda cute.
But I’m glad there is only one like you. It would get pretty cluttered here if everyone on this site made a posting every day they performed at their job.
January 4, 2011 @ 5:09 PM
glad you enjoy it. just
glad you enjoy it. just keeping it real as opposed to talking ivory tower
January 4, 2011 @ 5:31 PM
sdrealtor wrote:I am closing
[quote=sdrealtor]I am closing a house tomorrow at a price that could be a 1999/2000 price. It is a prime custom built home on a large lot west of the 5. For my client the bottom is TOMORROW![/quote]
I suppose, the more custom and the more unique the house is, the harder it is to find close comps, the harder it is to pinpoint the bottom.
On the other hand, homogeneous cookie-cutter neighborhoods can have well-defined bottoms and we can talk about year 200x prices.
To take this cookie-cutter neighborhood in your backyard
http://www.sdlookup.com/MLS-100053409-2339_Summerhill_Dr_Encinitas_CA_92024
$505,000 for a 3/3 twinhome. I posit that the 2002 price for this house would be in the 300’s, the 1999/2000 price would be in the high 200’s, and there were no real arms-length sales anywhere near the 1999/2000 price in this neighborhood in the last five years. And this will be true for 9 out of 10 cookie-cutter neighborhoods in NCC.
So, we can say quite truthfully and generally that NCC is at the present time at 2004 prices, with occasional exceptions.
January 4, 2011 @ 6:42 PM
Eugene I believe that the
Eugene I believe that the lost decade of Japan was characterized by zero growth. However, and you can correct me if I am wrong, the debt level that we have is staggering as compared to the debt level of Japan at that time.
The elephant in the room that everyone continues to ignore is the percentage of our gdp that is being used to simply service the debt at CURRENT interest levels. If you look at predictions of how much that will grow in the next several years it becomes quite scary. Those predictions also do not take into account interest rate hikes because if that happens things can lose control quickly.
As to the thoughts that as long as the world believes the US will not default we will all be okay and they will continue to finance our debt and lifestyle, I think that quite the opposite is true. I believe that it is universally believed that we indeed will default at aome point and until there is a clarification of what the new order will be like, and that those growing economies are still very dependent on our out of control consumerism, there simply is no choice. Additionally the new world creditors, IE China is simply taking our worthless dollars and siphoning them into commodity purchases, oil, natural gas, pretty much any natural resource they can get their hand on.
In the end I believe that the only similarity between the lost decade of Japan and the current US of today is the lack of any growth. I am not saying we cannot plod along several more years in the same manner with low rates. I am saying that at some point there will be a turn of events with rates. It doesn’t matter if it is forced upon us by our creditors. It doesn’t matter if we finally get our ass in gear and hike taxes in a big way and get spending under control and tighten the money supply. It WILL happen at some point and credit WILL be hard to come by. Maybe in 2 years, maybe in 5 maybe in 10.
I would be more then happy to entertain ideas of another way out.
January 4, 2011 @ 7:24 PM
Quote: I believe that the
[quote] I believe that the lost decade of Japan was characterized by zero growth. However, and you can correct me if I am wrong, the debt level that we have is staggering as compared to the debt level of Japan at that time[/quote]
Japan entered the lost decade with debt of 70% of GDP, and that quantity just grew and grew and around the time of 9/11 they were above 150% of GDP. It never bothered the creditors. After 20 years of deficit spending and debt to GDP growth, their interest rates are lower than ours.
[quote] the percentage of our gdp that is being used to simply service the debt at CURRENT interest levels. If you look at predictions of how much that will grow in the next several years it becomes quite scary.[/quote]
1.2% of GDP in 2010. Worst case scenario, it could climb to 4% of GDP.
There is certainly a way out. It should not be particularly difficult to balance the budget once the economy is back to full employment. Ending one of two wars and ending Bush tax cuts for the rich should do it. (Whether that will actually happen, is mostly a matter of politics.) At that point, simply holding the deficit to zero will whittle away the debt to GDP ratio because of GDP growth and inflation. We could get down to 60% debt to GDP by 2020 (down from 93% today) by balancing the budget by 2013 and keeping zero deficit and 3%/year inflation from that point.
January 4, 2011 @ 8:09 PM
I guess we disagree on the
I guess we disagree on the way things started. At the onset of the lost decade, Japan was actually the worlds largest creditor nation. Japan was also (at the time) a pretty large exporter of goods. The unemployment statistics in Japan through the late 80’s and 90’s was what, under 3%? It did not climb over 3% until 1995 and didnt climb over 4% until 1998. So our employment situation is much worse, our debt to gdp level is much higher, and while Japan entered the lost decade as the worlds leading creditor we are entering the lost decade as the worlds largest debtor nation. What is also true is that there is a stark difference in culture. We have been bred to consume and to spend and the Japanese have not.
The other elephant in the room which is conveniently ignored are the entitlement programs. Even with NO wars you would be hard pressed to admit that there is going to need to be a solution to these issues.
From the tax cut perspective, I entirely agree that repeal of all of the Bush era tax cuts across the board will be an essential component to recovery. Still though, I think the chips are stacked against us in many ways. I agree with you that we are in a deflationary period that shares many of the same symptoms of the lost decade. We may indeed remain in that mode for the same amount of time, however I still believe higher rates will happen, perhaps very high.
I guess we will see.
January 4, 2011 @ 10:27 PM
Quote:At the onset of the
[quote]At the onset of the lost decade, Japan was actually the worlds largest creditor nation. Japan was also (at the time) a pretty large exporter of goods.[/quote]
Japan was running budget deficits continuously since the early 70’s.
The USA has been and still is a major exporter of goods. Don’t underestimate the ability of Americans to work and produce. The manufacturing sector has been depressed because of Chinese currency manipulation, but Americans are still by far more productive than the Chinese, and they will reestablish themselves as soon as the Chinese central bank stops the manipulation (which it will have to, sooner or later).
And if you think that Americans are unique in their ability to consume and spend, you’re deeply mistaken. Americans don’t hold a candle to emerging nations. In the US, with its protestant roots and static socioeconomic stucture, conspicuous consumption is generally disapproved. Asians have no such compunctions. Mainland China is currently the largest worldwide market for Omega watches. The USA is not even close. Not because the Chinese people are all so rich (I’m sure that most people reading this could afford a $2000 watch), but because they care about these things. China is the third largest market for Porsches, and sales are rising so fast that they will be #1 in a few years. That’s despite the fact that Porsche charges absolutely insane prices in China (basic Porsche Boxster goes for the equivalent of $110,000, the 8-cylinder Cayenne S costs $220,000). And, of course, they are not buying all that with cash.
I would go as far as say that the only one doing any real saving in Asia is the Chinese communist government. Everyone else is on a massive shopping spree.
[quote]Once you move up the food chain things change. The higher you go, the more they change. So while you can truthfully say NCC is at 2004 prices you would truthfully be wrong in more cases than not.[/quote]
If I would be wrong in more cases than not, then surely you would find it easy to produce at least two homogeneous neighborhoods where I would be wrong.
Here’s another random example, further up the food chain, and this time with explicit 2004 and 2000 sales, and clearly I’m right in this neighborhood too:
http://www.sdlookup.com/MLS-100018784-13544_Portofino_Dr_Del_Mar_CA_92014
January 5, 2011 @ 7:44 AM
Eugene
You did the exact same
Eugene
You did the exact same thing again. Yes that is a higher price but it is bottom of the barrel entry level for that neighborhood (Del Mar). It also appears to have been very substantially remodelled since 2004.
Move up the chain in a given neighborhood and you will see what I am saying.
January 4, 2011 @ 8:21 PM
Eugene
Great example and
Eugene
Great example and hopefully one I can address through the haze of the wine I just drank. The house my client bought is extremely hard to comp but is defintely selling at least 40% below the peak and under 2001 pricing. My client is far more nearish than anyone on this board and he thinks its a deal of a lifetime.
Now on to Summerhill. I sold a townhouse a block away from them in late 1999 and actually has considering a move up to one of these twinhomes so I know them intimately. I’m very conservative and when I did make my move in 1999 it was a huge step out of my comfort zone to move up as much as I did but someone I respect and consider a mentor told me it was the right thing to do and he was right. In late 1999/early 2000 that would efeintely have sold in the high 200’s but it is low end entry level Encinitas. The demographics of who will live in Encinitas has changed pretty dramiatically since 1999 and you wont see those prices ever again. It is actually one of the 3 neighborhoods I hung my hat on when I mad my bet with CAR in 2007 because of that very belief. Once you move up the food chain things change. The higher you go, the more they change. So while you can truthfully say NCC is at 2004 prices you would truthfully be wrong in more cases than not.
January 4, 2011 @ 3:16 PM
Complete meaningless question
Complete meaningless question – the bottom price will also be different in different parts of the county…in Carmel Vally it maybe 2003 nominal prices, in Scripps Ranch it maybe 2002, San Marcos – 2001 nominal prices whereas in some other areas we may see 2000 nominal prices….morever the financing cost also plays a big role…so comparing nominal prices may also be meaningless. Somebody who managed to get 2002 nominal prices at a really low interest rate (lets say 30yr fixed at 4.25) is actually getting a much better deal than anyone in 2002 at similar price.
January 4, 2011 @ 3:33 PM
I think the mortgage market
I think the mortgage market has been effectively nationalized so I would not expect too much movement in rates over the next 5-10 years.
Good points Andy. One thing about the 2002 buyer though is that assuming they put money down and did not spend their equity, they could have refinanced down to the same 4.25 rate but that would mean many more years of payments because you don’t pay much principal the first 8 years.
Carmel Valley seems like an outlier.
January 4, 2011 @ 4:23 PM
Pem are you serious? You
Pem are you serious? You really do not see much movement in rates over the next 5-10 years? So you feel that all of our creditors and out debt will not command a much higher interest rate as time moves forward?
Can I ask what makes you think that?
January 4, 2011 @ 4:35 PM
Quote:So you feel that all of
[quote]So you feel that all of our creditors and out debt will not command a much higher interest rate as time moves forward? [/quote]
They have not for Japan, why should they for us?
January 5, 2011 @ 12:41 PM
Eugene wrote:Quote:So you
[quote=Eugene][quote]So you feel that all of our creditors and out debt will not command a much higher interest rate as time moves forward? [/quote]
They have not for Japan, why should they for us?[/quote]
Japan has a very different culture. One that emphasizes repaying your debt. People struggled that entire lost decade to repay the loans on homes that were ill suited to them, in which they were underwater, in which their payment financially crippled them. Do you see Americans doing that? I don’t.
The bottom is in the future. I suspect it will be at ~3-3.5x incomes. Whether that is above below peak pricing will depend on inflation and frankly, we will inflate out of this.
Gas prices will not be getting cheaper.
Food prices will not be getting cheaper.
Commodities will not be getting cheaper.
Your phone apps might get cheaper. But in aggregate, I suspect you’ll see increasing phone bills too.
I don’t think these will be little tame increases either. They’ll stay relatively tame, i.e. 2-3%. in the near term as long as unemployment is pushing 10%. I suspect we’ll have 10% unemployment for a very long time. The slack however in the commodities markets for foods and fuels is gone. Simple population growth will push them up dramatically.
Keep in mind that the Government inflation numbers are heavily weighted by housing (40%). And the near flat inflation is cause by housing essentially counter balancing increases in everything else.
Then there is how California will solve it’s budget problem. Unless someone has a Djinn to pull out, I don’t think either baseline solution of spending cuts or tax increases will make housing better and may further harm business in the State.
And of course, there is the Federal question. What will happen in two years? How will the Fed balance it’s budget? How will the Fed balance it’s Social Security hole?
The more I look, the more I see potential black swans and shocks to the market. An end to MID? A massive Tax overhaul? Social Security means testing? An American Debt Crises? The unthinking is becoming thinkable for a couple reasons. The politicians haven’t dealt with it in 40 years and the politicians don’t think, they play partisan games only thinking of the next election.
I still think we’re headed for the repeat. Say hello to stagflation, it’s coming back… What will you do when things like food are going up 15%+ a year and the job market is like today’s?
January 5, 2011 @ 9:44 PM
no_such_reality wrote:Eugene
[quote=no_such_reality][quote=Eugene][quote]So you feel that all of our creditors and out debt will not command a much higher interest rate as time moves forward? [/quote]
They have not for Japan, why should they for us?[/quote]
Japan has a very different culture. One that emphasizes repaying your debt. People struggled that entire lost decade to repay the loans on homes that were ill suited to them, in which they were underwater, in which their payment financially crippled them. Do you see Americans doing that? I don’t.
The bottom is in the future. I suspect it will be at ~3-3.5x incomes. Whether that is above below peak pricing will depend on inflation and frankly, we will inflate out of this.
Gas prices will not be getting cheaper.
Food prices will not be getting cheaper.
Commodities will not be getting cheaper.
Your phone apps might get cheaper. But in aggregate, I suspect you’ll see increasing phone bills too.
I don’t think these will be little tame increases either. They’ll stay relatively tame, i.e. 2-3%. in the near term as long as unemployment is pushing 10%. I suspect we’ll have 10% unemployment for a very long time. The slack however in the commodities markets for foods and fuels is gone. Simple population growth will push them up dramatically.
Keep in mind that the Government inflation numbers are heavily weighted by housing (40%). And the near flat inflation is cause by housing essentially counter balancing increases in everything else.
Then there is how California will solve it’s budget problem. Unless someone has a Djinn to pull out, I don’t think either baseline solution of spending cuts or tax increases will make housing better and may further harm business in the State.
And of course, there is the Federal question. What will happen in two years? How will the Fed balance it’s budget? How will the Fed balance it’s Social Security hole?
The more I look, the more I see potential black swans and shocks to the market. An end to MID? A massive Tax overhaul? Social Security means testing? An American Debt Crises? The unthinking is becoming thinkable for a couple reasons. The politicians haven’t dealt with it in 40 years and the politicians don’t think, they play partisan games only thinking of the next election.
I still think we’re headed for the repeat. Say hello to stagflation, it’s coming back… What will you do when things like food are going up 15%+ a year and the job market is like today’s?[/quote]
Totally agree with all of this. Good post.
January 4, 2011 @ 4:38 PM
Bond yields are a function of
Bond yields are a function of many things.
If people continue to think that chances of default are zero, and that other investments are risky, bond yields will stay low.
Since the US can print dollars, the risk of default will probably continue to be as close to zero as it always has.
Inflation risk is real, but it is more complicated than “printing money leads to inflation.”
Other investments may continue to be risky (stock market is almost certainly overvalued), making bonds *relatively* safe.
So there are lots of reasons to argue that bonds will stay where they are for a long time.
(I know that smarter people than me have argued that this will not happen, but this does not discount the fact that there are logical arguments that it *can* happen. So there’s no need to rehash the inflation debate here…)
January 4, 2011 @ 4:07 PM
andymajumder wrote:Complete
[quote=andymajumder]Complete meaningless question – the bottom price will also be different in different parts of the county…in Carmel Vally it maybe 2003 nominal prices, in Scripps Ranch it maybe 2002, San Marcos – 2001 nominal prices whereas in some other areas we may see 2000 nominal prices….morever the financing cost also plays a big role…so comparing nominal prices may also be meaningless. Somebody who managed to get 2002 nominal prices at a really low interest rate (lets say 30yr fixed at 4.25) is actually getting a much better deal than anyone in 2002 at similar price.[/quote]
It also depends if you’re talking inflation adjusted or not.
Nominal price wise, different neighborhoods will do better than others. But over time, perhaps decades, inflation adjusted, the proportional equilibrium will be restored (not necessarily all at the same time).
If you buy in a neighborhood or region that is holding up better, you may experience longer stagnation in prices.
January 4, 2011 @ 4:47 PM
Quote:Complete meaningless
[quote]Complete meaningless question – the bottom price will also be different in different parts of the county…[/quote]
Yep … Relative attractiveness of different areas changes over time. The difference between 2000 and 2002 is something like 20%. It is not inconceivable that the market changes sufficiently in ten+ years, that two houses in different parts of the county that were equally priced in 2000 are now fairly valued 20% apart.
Also, it does not make sense to refer to the bottom in the future tense, when it is already two years behind us.
January 4, 2011 @ 4:25 PM
I think house prices still
I think house prices still have a long way to go. Many people are still in the mindset that a house is going to go up 25% year after year, rather than viewing it first as a place to live. People need to buy what they can afford now, not what they can afford in three years when they hope the house will be “worth” much more.
January 4, 2011 @ 4:37 PM
Tillers wrote:I think house
[quote=Tillers]I think house prices still have a long way to go. Many people are still in the mindset that a house is going to go up 25% year after year, rather than viewing it first as a place to live. People need to buy what they can afford now, not what they can afford in three years when they hope the house will be “worth” much more.[/quote]
I agree.
However, as long as China is happy to buy US financial assets in return for making everything we need, house prices will stay very high compared to long term historical norms.
Some day, we may realize that we will be better off with public policy that makes housing into shelter, not a several hundred thousand dollar throw of the dice in a casino. But that day is not even on the horizon now.
January 4, 2011 @ 6:48 PM
patientrenter wrote:Tillers
[quote=patientrenter][quote=Tillers]I think house prices still have a long way to go. Many people are still in the mindset that a house is going to go up 25% year after year, rather than viewing it first as a place to live. People need to buy what they can afford now, not what they can afford in three years when they hope the house will be “worth” much more.[/quote]
I agree.
However, as long as China is happy to buy US financial assets in return for making everything we need, house prices will stay very high compared to long term historical norms.
Some day, we may realize that we will be better off with public policy that makes housing into shelter, not a several hundred thousand dollar throw of the dice in a casino. But that day is not even on the horizon now.[/quote]
Actually, aside from the coastal areas, houses in America are the lowest in the developed world, even lower than in China.
I see the high-cost coastal areas stagnating while the proportional differences return to long term trends.
January 4, 2011 @ 8:06 PM
briansd1 wrote:Actually,
[quote=briansd1]Actually, aside from the coastal areas, houses in America are the lowest in the developed world, even lower than in China.[/quote]
Yep. There are cities all over Asia with higher prices per square foot than San Diego. In Bangkok, $200/sf is considered “middle market” and $450/sf is considered “luxury”. New construction in Shanghai averages $300/sf. Taipei averages $400/sf. Seoul and Hong Kong are, I believe, above $600/sf.
And if you look at price to income or price to GDP ratios, it becomes hard to find any developed country cheaper then the US.
Asians took a good close look at our American consumerism, and liked it so much that they built a bigger and better version of consumerism of their own.
January 5, 2011 @ 8:05 AM
Does everyone still think
Does everyone still think “the bottom” is in the future ?
January 5, 2011 @ 8:13 AM
FormerSanDiegan wrote:Does
[quote=FormerSanDiegan]Does everyone still think “the bottom” is in the future ?[/quote]
If anything,yes, because it is here today, more or less, and will be tomorrow,also so more or less. I couldn’t really get that worked up about it if I tried…seems like quibbling.
January 5, 2011 @ 11:34 AM
I’ve said it before and I
I’ve said it before and I will say it again. there is no such thing as a bottom defined by a single point in time when all homes will sell at the lowest price. there is only a period of time where you can go out and create your own bottom by getting the lowest possible price on a home you want. IMO we are in that time period. How long it will last is another matter and one I dont know. I do beleive it will persist another couple years.
January 5, 2011 @ 12:01 PM
We get it.
We understand that
We get it.
We understand that we are talking about aggregates.
We understand the limitations of using aggregates in making personal financial decisions.
We’re ok with that.
We also understand that the guy with “realtor” in his name thinks that now is always the right time to buy/sell real estate.
We know that this will always be the case, so there’s really no need to repeat it constantly.
We get it.
Do you get it?
January 5, 2011 @ 2:31 PM
pri_dk wrote:We get it.
We
[quote=pri_dk]We get it.
We understand that we are talking about aggregates.
We understand the limitations of using aggregates in making personal financial decisions.
We’re ok with that.
We also understand that the guy with “realtor” in his name thinks that now is always the right time to buy/sell real estate.
We know that this will always be the case, so there’s really no need to repeat it constantly.
We get it.
Do you get it?[/quote]
You couldnt be MORE wrong. For the last 6 years I have been saying NOW IS NOT the time to buy for most people. Everyone on this board stands witness to that as do the archives of my posts. It has taken me a very long time to get comfortable with this but for the first time since at least early 2003 I think NOW it truly is a good time to buy for MOST people.
January 5, 2011 @ 2:33 PM
I made decent money stocking
I made decent money stocking up on sardines last year which I eat most days. Go long sardines and other canned fish
January 6, 2011 @ 12:03 AM
You couldnt be MORE wrong.
You couldnt be MORE wrong. For the last 6 years I have been saying NOW IS NOT the time to buy for most people. Everyone on this board stands witness to that as do the archives of my posts. It has taken me a very long time to get comfortable with this but for the first time since at least early 2003 I think NOW it truly is a good time to buy for MOST people.
sdrealtor, Let me get this straight. We all know San Diego housing market bottomed around March 2009, but you advised that WAS NOT THE TIME to buy. And you’re apparently proud of that shitty advice.
Then markets popped up in San Diego about 15%. You still said that WAS NOT THE TIME to buy. ON that count, you were right…
Because today, we’re looking back at FOUR solid months of housing prices retreating back down in double dip fashion, with prices already caved back down to within 5% of the March ’09 bottom (Here I’m making some assumptions about the yet to arrive Nov and Dec Case-SHiller data)
and NOW you tell us “..I think NOW it truly is a good time to buy for MOST people.”
Look, I like your previous posts in other threads on other topics, but you sound like a moron in this post. I don’t believe you are a moron, I just believe you are another Realtor proving Realtors are the WORST out of everyone when it comes to predicting where housing prices are going.
If I would have listened to my San Diego Realtor’s advice to NOT sell my homes – at a time which turned out to be top of the bubble, it would have cost me half a million dollars. I ignored her shitty advice, and avoided losing the half-million.
January 6, 2011 @ 12:19 AM
Obviously you dont have this
Obviously you dont have this straight. First off we dont all know the market bottomed in March 2009. What bottomed in March 2009 was the prices on the worst properties and there was lots of them being sold as the subprime properties were liquidated hence the median was at its lowest point. In March 2009 I never said now was not the the time to buy, I said there were opportunities out there but was nowhere near ready to make a blanket statement like I recently have. I needed more evidence of reaching some sort of stability.
Today you are looking at prices dropping the last few months due to a secular cycle that occurs nearly every year. Talk to me in May when that same secular cycle powers prices back upward.
You know I am not a moron and I thought long and hard before being ready to make as strong as a statement as I have recently made. This Realtor has consistently proven that he has been spot on on predicting housing prices and all you have to do is comb through the archives of this site to verify that. Similarly we could comb through those archives to find your stock trading predictions were …ummmm….not too good?
If I would have listened to your investment advice I would have lost a fortune but not half a million. Ironically her sitty advice would not have cost you half a million because what you sold (a shitty 3BR condo in RB) was never worth half a million and we know you are making up that you would have lost half a million on it. Sorry no room for liars here.
I stand by my opinion that for MOST buyers now is the time to be out there looking to find those rare great opportunites that while not easy to find can be found.
January 6, 2011 @ 1:08 AM
It has been a good time to
It has been a good time to buy since late 2008. As long as one concentrate their efforts on foreclosures/short sales/builder inventories outside of the 10-minute-to-beach-strip along the coast.
January 6, 2011 @ 10:47 AM
ocrenter wrote:It has been a
[quote=ocrenter]It has been a good time to buy since late 2008. As long as one concentrate their efforts on foreclosures/short sales/builder inventories outside of the 10-minute-to-beach-strip along the coast.[/quote]
Well I guess you can rule out Santee.
January 6, 2011 @ 11:57 AM
flinger wrote:ocrenter
[quote=flinger][quote=ocrenter]It has been a good time to buy since late 2008. As long as one concentrate their efforts on foreclosures/short sales/builder inventories outside of the 10-minute-to-beach-strip along the coast.[/quote]
Well I guess you can rule out Santee.[/quote]
I Love it! A classic by a longtime lurker
January 5, 2011 @ 12:14 PM
sdrealtor wrote:I’ve said it
[quote=sdrealtor]I’ve said it before and I will say it again. there is no such thing as a bottom defined by a single point in time when all homes will sell at the lowest price. there is only a period of time where you can go out and create your own bottom by getting the lowest possible price on a home you want. IMO we are in that time period. [/quote]
Yes I agree.
Depending on the market, such as Downtown San Diego, Point Loma, La Jolla, Del Mar, I believe that you will get better choices by waiting.
I personally would wait until winter 2011. The art of the deal is more important to me than finding a nest for the family.
[quote=sdrealtor]
How long it will last is another matter and one I dont know. I do beleive it will persist another couple years.[/quote]
Another couple years sounds about right. Longer if interest rates shoot up as SD Realtor seems to believe.
January 5, 2011 @ 2:29 PM
Brian
The problem with
Brian
The problem with waiting until Winter 2011 is that just because you will be ready the house you want may not be. Most people are pretty particular in what they want in a home. Getting a great price does not make a great deal if you dont get a great home also. Even if you plan to wait and you arent looking now you may not even recognize a great opportunity in Winter 2011 and wont be preapred to move fast or decisvely enough to capitalize on it.
January 5, 2011 @ 3:18 PM
sdrealtor wrote:Brian
The
[quote=sdrealtor]Brian
The problem with waiting until Winter 2011 is that just because you will be ready the house you want may not be. Most people are pretty particular in what they want in a home. Getting a great price does not make a great deal if you dont get a great home also. Even if you plan to wait and you arent looking now you may not even recognize a great opportunity in Winter 2011 and wont be preapred to move fast or decisvely enough to capitalize on it.[/quote]
Wait a minute…
It is currently Winter.
It is currently 2011.
… so why do we have to wait for Winter 2011 when that is the present ?
January 5, 2011 @ 12:49 PM
I believe many areas will see
I believe many areas will see new lows, lower than the lows of 1st Qtr 2009
Hitting that bottom will occur when all the cans in play can no longer be kicked down the road.
In other words, the world finally loses faith in the US Dollar, plus our government exhausts the limits of mitigating that through buying its own treasury securities at its own auctions. Plus the US government is forced to devalue the currency in order to afford to service foreign debt. Thus interest rates on everything from treasury securities to mortgages go UP dramatically, and also you have US government no longer insuring mortgages and Fanny/Freddie have been reformed (so mortgages now must all be insured and purchased by private sector). And of course, banks can no longer hold back the final and second massive wave of foreclosures, so banks release shadow inventory onto the housing market.
When all those factors come into play, we’ll finally see the bottom.
But it could easily be five years before we see that.
When all that happens, I believe that bottom will be AT LEAST an additional 15% lower (REAL, not nominal pricing) than the housing price lows of 1st Qtr 2009
January 6, 2011 @ 4:11 AM
LOL…omg…. With all due
LOL…omg…. With all due respects, this thread is sounding like how some phd’s think. Analysis to paralysis…
Are folks really still trying to predict when the bottom is going to occur? Have we not yet figured out that there is plenty of government intervention that will make this ultimately unpredictable?
Look around…Government intervention everywhere. And it’s not going to stop…In fact, we’ll see more of it….they’re doing just that in the equities market right now. Look around. Web 3.0 is here again…Facebook IPO, LinkedIn pending IPO…………We’re baaaaaaaaaaaaaack……
Rinse and repeat.
January 6, 2011 @ 11:56 AM
flu wrote:LOL…omg…. With
[quote=flu]LOL…omg…. With all due respects, this thread is sounding like how some phd’s think. Analysis to paralysis…
Are folks really still trying to predict when the bottom is going to occur? Have we not yet figured out that there is plenty of government intervention that will make this ultimately unpredictable?
Look around…Government intervention everywhere. And it’s not going to stop…In fact, we’ll see more of it….they’re doing just that in the equities market right now. Look around. Web 3.0 is here again…Facebook IPO, LinkedIn pending IPO…………We’re baaaaaaaaaaaaaack……
Rinse and repeat.[/quote]
Exactly….who would have thought back in March 2009 that stock markets would double in less than two years and get back to the pre crash levels…Nasdaq has more than doubled…of course this is the after effect of tremendous amount of money pumped in by Fed. Fed and treasury were probably even buying equities in 2009 to prop up the markets and boost sentiment.
If home prices keep going down, who are the biggest losers, the big banks. Do you think banks will just sit and watch that…we all know they have the politicians in their pockets (doesn’t matter which party) and the Fed will find ways to prop things up and they can keep printing money, so all this talk of 25-30% further drop in nominal prices is wishful thinking. It’s not happening….