Think Housing Can’t Go Down Significantly in Southern California?
I find it hilarious when I hear David Lereah, the N.A.R. housing shill, talking about how great it is to buy (or sell) a house today. These morons forget even what happened only a decade ago. Housing declines last many years (take a look at one of my links to housing cycles dating back to the 1800s). The above chart shows some massive changes in particular areas.
And another lame argument I keep hearing is all these buyers that are on the sidelines will jump in this upcoming spring and summer. You think buyers are going to jump in when they hear these headlines:
1. Housing prices declining at record pace.
2. Mortgage resets totaling in the trillions.
3. Foreclosures at all time highs.
4. Zero to negative appreciation.
Yeah, that is the rallying cry for housing. Actually sounds more like the siren call…
Subscribe to feed
6 Responses to “Think Housing Can’t Go Down Significantly in Southern California?”
Take a look at my market history & forecast report for Bakersfield, Modesto and Los Angeles at
http://homepricehistory.blogspot.com/. More SoCal reports will published in a few days, along with a new city every day.
You’ve done a great job with the analysis. I took a look at the L.A. County paper. From your paper, it looks like you are predicting a 15 to 20 percent drop over a few years.
This is probably where I would disagree. I think the shocks to the system will occur much quicker. I doubt anyone predicted prices to zoom up 150% in the last six years. Most economist are assuming prices will adjust down slowly but they do not factor (and how could they) that in California alone:
Top 3 Job Growth Industries:
Consturction (54,000 jobs)
Credit Banking (28,000 jobs)
Retail Trade (19,000 jobs)
In addition, we are seeing many agents and brokers leave the industry. What sectors will they be absorbed into? With the tech bust, many folks were able to retrain since they had four year degrees. Think this applies to many in the real estate business? Most will have to go back to even get a two year degree.
No one really knows what will happen but I’m betting on a faster and quicker drop.
Thanks for taking the time on your analysis though.
We may also be looking at price declines that dwarf the -36% and -10% numbers from the 1990s.
I think that what we are looking at is a bursting real estate bubble that will be much deeper and more devastating than anything that has happened in the past since the Great Depression.
I’m still watching November sales and pending sales for San Diego at sandiego.houserebate. com and it looks like November sales have fallen off a cliff.
So, I predict that the number of foreclosures will rise exponentially on zero real estate sales..
You guys very may be right. However, my analyiss is based upon the best predictor of the future – the past. But as mentioned there has been a runup like this before. Don’t forget to see today’s report on San Diego
Local Home Price Analysis
I work at the post office and the foreclosures are tremendous. Trays of foreclosure notices, also the storage units where people are putting their possesions, and reposessed cars and at least every 1 in 100 people must owe the IRS they just send out trays and trays of payment coupons. No one talks about the taxes on the property there are tons of letters from the Assesors office and insurance companies. The certified letters have exploded. The new business in town is foreclosure companies offering services to mortgage companies. I have worked the first class mail for years and I have never seen this type of mail and so much of it(all the certified mail). What happens with the tax base when all these people aren’t paying into the property tax that was projected before the bubble burst, they opted out of escrow accouts. What happens when these house sit abandoned and vandals begin to destroy the property. What happens when people refuse to lower rents so that at least the property will have inhabitants because they want at least what they pay every month and no one can afford 3,500 a month. Right now I see most of the names on the mail has a tendency to be minorities but one of the minorities is middle eastern everyone figures african americans and hispanics no one ever mentions middle eastern or filipino and there are alot of them just as many as every one else. People are putting millions of dollars worth of home furnishing and personal items in storage and they are loosing it to non payment in alarming rates. The mail suggest bills aren’t getting paid and there is one company that comes from an east coast address that sends out an alarming amount of certified mail, I have no idea what it is because they do not tell the name of the sender only the address and many people get that certified letter everyday. The mail tells a better picture than what we are hearing on the news. When someone gets a certified letter it means that this company means business and this is the first step until something worse comes knocking at your door. Each postal tray holds up to 500 pieces of mail but more than likely these trays hold about 250 pieces of mail and there are trays and trays and trays of these certified mail pieces every day. All that I have listed. When I discuss it with people they feel as long as it doesn’t affect them they really don’t care. Or what can they do about it but ride it out. I feel with working this particular kind of mail I think it is bad now. I believe it is going to get bigger and more out of control. I used to wonder who could afford all those houses and at the price they were paying because I remember what I went through buying my house conventional 13 years ago I couldn’t have a car note or credit card payment until after I bought the house there was a formula then, now there are no rules and this is going to be a disaster. I think every mortgage company should be required to work with these people before they actually loose their house to stem the wave of foreclosure. They were the ones who lied convincing people they could afford a 350k house making 30k a year, impossible, unless they have a 1% 50yr fixed. Right now these foreclosures companies are having a free for all and no matter what there are only so many people who are going to buy foreclosures and if they do who will have the money to buy from them or to rent them.
Excellent post from the postman. Beware Mr. postman, sounds like a lot of the information you spoke of is info. the post office might rather keep private. Don’t get in trouble because of a blog, even a very good one like this at Dr. Bubbles address.
I’m a midwesterner…looking forward to a super duper cheap second home in Las Vegas within 3 years. A mcmansion for a very cheap price, or more likely an amazing condo for a pittance.
Leave a Reply