Here's a good interview with economist Chris Thornberg.
Take a listen to economist Chris Thornberg as he is interviewed on the housing market. Here's a few gems,
Prices in California have basically come down halfway to where they're going to end up.
In general, we would have to see about a 40-45% decline in home prices in CA just to get us back to normal levels relative to income.
If you want to sell and you need to sell, you're going to have to price it realistically.
We hear this all the time - people can't get loans, that's not actually the circumstance. If you do qualify, that is, you have the cash to put down, and your income is in line with what you're trying to borrow, and guess what, you can verify the income, you can still get a loan.
The problem is here in CA even with the drop we've seen in home prices, prices are still high relative to incomes. If you can't qualify today, it's probably good for you.
Housing markets don't bounce, they splat. They hit bottom and they stay there. You'll have a long opportunity to capitalize on those low prices once we find that bottom."
Whe asked what will it take to unfreeze this market.
It's not frozen. Quite the contrary, it's moving very rapidly, just not in the direction we like to think about. Prices will fall to the point that will eventually draw buyers back in. And then things get moving.
It's not the news people want to hear. It's certainly not the news real estate agents want to hear, because you can make a lot more money on a 500k house than a 200k house. But if the house is only worth 200k, all the wishing in the world doesn't make home prices go up again. But guess what - the value was never there in the first place.
5 comments:
Splat is right! I have looked at the average home values in California since 1968 and the bottom lasts for 24-36 months after every mejor decline.
ITS SO TRUE...AND A YEAR AGO I WAS SEEING PEOPLE DESPERATELY BUYING HOMES AT 25% LESS THAN WHAT THEY HAD BEEN SELLING FOR...ECSTATIC WHEN THEIR OFFERS GOT ACCEPTED ...THINKING THAT THERE WAS ONLY GOING TO BE A TEN MINUTE WINDOW OF OPPORTUNITY TO BUY, AND THEN REAL ESTATE WOULD SKYROCKET AGAIN. THOSE SAME BUYERS HAVE LOST OVER 100,000.00 ON THE HOMES THAT THEY PURCHASED LAST YEAR. I ADMIT THAT IT GETS TREAL TEMPTING TO BUY SOMETHING RIGHT NOW, ESPECIALLY FOR ME SINCE I FILED FOR BANKRUPTCY 6 MONTHS BEFORE THE MARKET WENT UP. ALTHOUGH I FELT LIKE I HAD ONLY LOST A COUPLE OF HUNDRED THOUSAND, BY THE PEAK OF THE MARKET LESS THAN 2 YEARS LATER., THE PROPERTIES THAT I HAD FORFEITED ...WHICH I HAD OWNED FOR 10-20 YEARS EACH HAD NOW BLOSSOMED TO OVER 6 MILLION DOLLARS.
THE THING TO REMEMBER IS THAT EVERY TIME YOU LOSE OUT ON A GOOD DEAL...EVERY HOUSE THAT FOLLOWS IT WILL BE THE SAME PRICE OR LOWER....WHICH ESSENTIALLY MEANS...GUESS WHAT? THERE ARE NO GOOD DEALS. NOT UNTIL THE FAT LADY SINGS. SO TO ANYONE IN THE SAME BOAT AS ME...BE PATIENT. THE RIGHT HOUSE AND THE RIGHT PRICE WILL COME ALL AT TYHE RIGHT TIME
Maybe not splat, just yet. Maybe splat later, when the bailout money has been (mis)spent. For now, we'll have to be entertain by watching the real estate bubble waft downward on a cool breeze, into valley of cactus. Ok, I dunno wtf that means either, so rather than explain further, I direct your attention to this article by John Stossel, who is a far better 'splainer than mwah.
http://www.theatlasphere.com/columns/081008-stossel-bailouts.php
The crisis in the international economic scene is bound to have its repercussions in the State economy as well. The NRIs, the export and import-based companies and the real estate sector may suffer if the global economic meltdown continues. The NRIs will have to share the burden of measures being implemented by their host countries to ward off the crisis. The result will be a slowdown in the remittances from abroad which is likely to affect a spectrum of activities in the State. The boom in the real estate sector was driven by the money supply in the market.For more view- realtydigest.blogspot.com
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