Check out this chart. If we accept the assumption that we will once again hit the bottom of the affordability graph due to crash momentum in the other direction, I pose the question, when will the bottom truly be in? Take a look at the red lines for 2008, 2009, 2010 If that situation occurs, it will be the fastest reversion of all time. Now look at the light blue line back around 1991. Since real estate is not liquid, and "sticky", real estate crashes tend to deflate very slowly over time. If you approximate this rate of bubble deflation, it would put us out around 2024 or later :eek: Observer the larger light blue line with a similar recovery slope. I think we fall faster this time, but care to guess where we hit bottom? I just dont see it in 2008, or 2009, probably not even 2010. Sorry for the graph typos... too lazy to fix
PS: I dont want to hear from cry baby bag holders and irrational real estate bulls. If you think you have a good reason for a vastly different scenario, post some actual data to back it up along with some solid logic
im in SD great weather---LOTS OF LOTS of homes for sale.... its gonna get ugly, we got in a while ago and locked in on the lows and never spent a dime of equity...im hoping were ok but i dont get that feeling from many neighbors and friends.
The blue line is pointless, because it is obvious the market is falling faster than that. All i see out of your graph is that is shows a bottom in 08, possibly early 09. Your blue line is as dumb as saying "well if the nasdaq started going up like it did from 95-00 we would see 10k in 2012" Its a pointless statement because it isnt whats happening. Also please learn how to write your whole "argument" in ONE post, it isnt too hard is it? Theres no need for you to make multiple back to back posts everytime you try to say something.
Using rough median numbers, detached homes are about 800K, median income 55K 800/55 = 14.5, which is the top of that graph If we hit the lows of 7X income, that 800K home will be $385K :eek: Some people are saying 50% drop for california. Considering the magnitude of this bubble and the panic that could follow, its actually a possibility. I dont think we will lose 50% at the bottom, but I could be wrong. Another 30-40% seems very well within reach though. The speed of the drop right now is historic. Id bet home prices are cheaper in 2010. Cant believe anyone would consider buying right now with the freight train bearing down on them
Some areas of socal may never recover. However, as suggested by my model, I think most areas of san diego will recover in 7 years.
Thats why I added the yellow line. Early 09??? So you think its going to accelerate even more??? That would be an insanely fast crash for real estate. Hate chronic bitchers. Omg its the end of the f-ing world, I wrote 2 posts in a row.
Anyone who has owned a home in socal over the last 20 years was probably underwater at one time. Its not a huge tragedy particularly if you like the house you have ended up in. If you can, just sit tight, make your mortage payment and don't freak out. Last time this happened (around '92) it lasted about 7-8 years so some of the folks predicting in this thread have got it right. For people that lose their jobs and can't make their mortgage payment its a completely different matter. Definitely a disaster there. Once in awhile the socal real-estate market shakes out the speculators and unqualified owners. It happens here over and over again. I don't even try to time it. The 20% I put down on my current home has likely vaporized but all of that money was profit from a previous home that experienced unreasonable appreciation (value suddenly doubled around 2005) so its kind of a wash. Now if the federal government steps in and tries to save the speculators and unqualified owners then all bets are off. They need to let things take a natural course. The idea that these foreclosures are going to wreak the economy is hard to believe imho.