Depressing technical note: Typically I name my graphics by the month and type of graph. I have started adding the year, as it seems I may be at this for longer than I planned.
Inventory was gathered from ZipRealty for single family homes on the date indicated.
Posts
5 comments:
BT,
There is an awful lot of homes out there still priced to sit. I'm guessing people are thinking "I can afford the carrying costs but I can't take the neg hit all at once".
Real life quote from a neighbor in 95829...who is moving to another house in 95829, and renting his existing home (2900 sq ft, cost about $440 when built - original owner - plus upgrades in landscaping, blinds, etc.)
"Yeah, we are going to rent it out. You can't sell now."
-EJ
I've heard the same thing and don't think the logic is crazy. By the time you pay the 7%+ transaction costs, it doesn't make sense to sell unless you have too, even if you are running a little negative.
This situation doesn't help the renters trying to buy, but I think it will take 3-4 years of consistent declines before people will decide that re is going down forever and just take the hit.
I personally don't think we'll get 3-4 years of consistent decline *and* flat rents, but that is just my guess.
If homes price keep going down for 3-4 more years, it is going to be a huge deal for our local and national economy. I don't know how long they will go down, and anyone else's guess is probably better than mine. But 3-4 years would be a huge deal. Case-Schiller and others suggest we have room for a 40-50% decline from the 2005 peak. In my zip code (95682) I've already seen about 25% decline, so we have another 25% (from the peak) to go, which I think is likely. But the question I keep asking myself is, "What if the 50% decline is too conservative? What if the decline is more?" I'm not predicting, just something I try to keep in mind as I watch for "the bottom." And those folks (and banks) that price their homes above the market, are just going to be disappointed, while those that price them below the market have at least a chance of selling.
some sub-markets are certainly going to go beyond 50% declines. There were a few places during 05 that were asking and getting prices in crappy areas at only the slightest discounts when compared to established, proven neighborhoods.
I can't wait for '09 when the East Sacs, Land Parks, Davis' et al of the world have to face reality and come 40% off of the peak #s.
Post a Comment