The Beginning of Giving Houses Away.

realestatetimer · Jan 17, 2006

According to DataQuick, the median price home in San Diego fell $15,000 in December 2005.

This was the biggest drop in 18 years.

Is this simply a pause that refreshes ... or is this the beginning of the avalanche?

Robert Campbell

dgabriel · Jan 17, 2006

Quote from realestatetimer:

According to DataQuick, the median price home in San Diego fell $15,000 in December 2005.

This was the biggest drop in 18 years.

Is this simply a pause that refreshes ... or is this the beginning of the avalanche?

Robert Campbell

Was that the biggest $ or % drop?

realestatetimer · Jan 17, 2006

It was the biggest dollar drop, according to DataQuick.

Good point of clarification.

Robert Campbell

slapshot · Jan 17, 2006

Quote from flyingiguana:

housing prices have declined in the past. remember the greater the bubble the greater the burst

Historically, real estate has gone up what, about 8% approximately on average? Is it even that high?

Stocks show a better return over the last 100 years or so, last I read S&P avg. about 11%.

The 8% gain doesn't count the big money some folks dump into repairs/upgrades for their homes.

However, it is easier for people to luck into the big gains simply because they were living there when it went up in value - easier timing than other investments.

IMO, there will be a pullback in prices, not a crash - simply because markets tend to revert back to the mean at some point.

Also, I live in AZ - and I know that people tend to underestimate the effect of both legal and illegal immigration holding up home/condo prices (high rental demand as well as fairly hot buy/sell market)

Also, I am in the mortgage business - and I am watching people's appraisals start to come in a lot lower that what they thought their house was worth - sometimes by $20 or 30K.

My friend the realtor says that in our area, the supply of available homes has just spiked up dramatically in the last couple of months to record levels. Just a few months before that, the supply of available homes on the market was very low.

You do the math.

realestatetimer · Jan 17, 2006

>>>>>Historically, real estate has gone up what, about 8% approximately on average? Is it even that high?

The U.S. median priced home has appreciated slightly above the rate of inflation for the past 50 years or so.

Leverage, of course, magnifies those returns.

hairdresser · Jan 17, 2006

The ironic thing is people said that 1st they cant lose, now people are starting to say its a long term investment. hmm, what does that sound like.

realestatetimer · Jan 17, 2006

>>>>The ironic thing is people said that 1st they cant lose, now people are starting to say its a long term investment. hmm, what does that sound like.

Sounds like a historically reliable indicator as to what direction the current trend is moving.

jem · Jan 17, 2006

Quote from mhashe:

Recent stat I looked at. In CA only 14% of the population can afford a house there. People moving out of that state in droves.
In a decade those $500,000 Trailers will soon be worth what they really are $50,000. $1.2 mil for a crappy 3 bed 2 bath in San Diego. Outrageous.

I was one of the people who cashed out. And like a few of my friends who cashed out we are all looking to get back in on a pullback. How deep do you think the pullback will get before everyone who could not afford san diego would be willing to pull the trigger to live in one of the best climates in the world.

My bet with my money will be 30%. And it assuming it is still a safe place to live on the sell off.

Chagi · Jan 17, 2006

Quote from hairdresser:

Only renters call it a bubble.

I suggest you read the 2nd Edition of Irrational Exuberance, it has some interesting points regarding the housing market.

Chagi · Jan 17, 2006

Quote from slapshot:

Historically, real estate has gone up what, about 8% approximately on average? Is it even that high?

We appear to be on the same side of the argument, but houses have not historically appreciated by 8% per year, they have instead appreciated by slightly more than inflation. I would have to go back and find the relevant quote, but Shiller's book mentioned something along the lines of historical real returns in the housing market being something like 0.4% per annum.

My interpretation of this was that a home to live in is actually a pretty decent investment (if bought at the right time), but houses are actually fairly crappy investments beyond that (not counting speculative periods).