Posted on 11/27/2007 7:58:34 AM PST by shrinkermd
No one knows how severe the slump will be, but economists and real estate experts interviewed by The Times, and who were willing to make predictions, said prices could fall 15% to 25% before turning back up.
Most said values would continue falling through at least next year, and some thought the market wouldn't reverse course until 2010.
That could translate to big declines for home buyers who bought at the peak of the market, which various measures place in late 2006 or early 2007.
For example, a home that sold for $800,000 in 2006 could fall to $600,000 over the next two years.
Some analysts, including UC Berkeley professor Kenneth Rosen, believe the severity of the downturn will vary by region.
Areas such as the Central Valley and the Inland Empire will be the hardest hit, he said, because these attracted a higher percentage of new buyers with shaky credit, and many of them are now defaulting on their loans. He believes values in these communities could fall by 15%.
But "in areas where there is very little new housing, where it's hard to build and a lot of wealthy people live, there will be little decline or maybe none at all."
So far, the monthly home sales figures appear to bear that out. Last month, for example, median home values fell 15.1% in Riverside County but only 3.8% in Los Angeles County, according to DataQuick Information Services.
(Excerpt) Read more at latimes.com ...
Though I could possibly lower my taxes if they ..... (naw, that will never happen)
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I think we are going to hear about lower housing prices, recession fears, etc at least until the next election. ;-)
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If you ask me, well established and desirable areas will weather the storm, but the new developments and speculative development in the outer suburbs are going to take a big hit.
I have been looking at farmland in Virginia. In some of the less well-known areas, you can track the decline in prices week to week. In the well-established areas around Charlottesville, you wouldn’t know there was a crisis going on.
I’m just glad I’m paid off and living in a very small town.
Count on it. Along with lotsa stories of women overcoming obstacles in a male dominated world. Got to make sure people know Hitlery can be "that" person.
When real estate prices jumped a surprising 100% or so in a span of abut five years (a generalization of course, some places moved little if at all, others went stratospheric), maybe slipping backward 25% is not really that much of a blow.
There are two ways out of this, you know. Sell at the lower price, and take your losses, or stay put, until the prices rise to the point you think they ought to be, which may be six months, or ten years. Unless there is a really compelling reason to move elsewhere, staying in place is the sensible alternative.
But that is dragging economics into it.
I recall my parent’s home being valued at $550,000 during the go-go (Reagan) 80’s and ultimately selling for $235,000 during the recession of the early 90’s.
And so it goes...
If the median household income in the area is $80,000, I think the fall could be a lot steeper, perhaps to as low as $300,000. People are also failing to take into account that the fact that banks are discovering that they don't have a perfected interest in homes in the event of a foreclosure. Congresscritters are now saying that banks don't have the right to foreclose in the event of payment defaults. This means that the banks must now factor in the possibility of properties being tied up limbo land after the borrower stops making payments, with no end in sight. Who is gonna make home loans with conditions like these? Making home loans in this situation is a recipe for bank failure - what it means is the cessation of mortgage lending. And a further deterioration in home prices, since few people can pony up 100% cash for home purchases.
There is an opportunity cost with staying put. Selling at a loss, renting and investing the difference may be a better choice.
The question is: how much did that home sell for in 2005? I'll bet that a graph of housing prices would show that the current drop is simply a return back to the trend line before the investment bubble. Remember, when interest rates reached historic lows, two things happened. People qualified to carry more debt and investors anxious for a decent rate of return turned to real estate. Demand exceeded supply, prices rose as a result making the investment even more attractive, and the spiral fed on itself like a hurricane over warm waters.
Absolutely. And everything will be rosy on January 21, 2009
One has to question how smart that professor is ? I saw one subdivision in that area on tv that had 350 foreclosed homes in it. The town was having to throw homeless people out and mow yards.
15% LOL
You are assuming a Pubbie wins.
Why are you expecting a Democrat win? I'm not. We may look like we can't settle on a candidate right now but look at the competition.
The house next door to me sold at $100,000 about 7 years ago. Then it sold at least 3 different time since and was sold to the current owner at $260,000. The current owner planned to sell but is living there now because he can’t absorb the loss he’ll take.
The neighbor on the other side was smart. His house was paid off and he bought and remodeled a farmhouse not far away. He had the house next door for sale but took it off the market this summer. He figures that if he really wants to he can move to the farmhouse and rent the place next to me to his son till the prices improve.
If a Dem wins, everything will be rosy on January 21, 2009. If a Pubbie wins, we’ll be doomed for the next four years.
That’s the message they’re pushing. It’s the message the Dems need.
Yep. The tax assessment on my 25 acre 'estate' just went up 50%.
Wal*Mart will run out of pitchforks for the next county Supervisors meeting.
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