Why do you think the median should be 148k? How did you calculate it, or did you read it from a talking head's blog? IMO, RE is almost done correcting. My property north of detroit has taken %15 hit from the highs, and that low was 3 months ago. Comps are coming back up in the area and I'm ~10% off the highs currently. Regards,
Us houses are not internationally arbitraged like transportable commodities are. Perfect example to look at is US Natural Gas. While the whole oil complex has made historical prices, and a good portion do to dollar devaluation, natty has been stuck with purely domestic fundamentals. That is why the old 6:1 ratio in pricing has de-coupled. If we could arb and t-port us natgas internationally, natty would likely be trading $15.00. Housing, like natty, is stuck with purely domestic fundamentals and the value of the dollar has no bearing on either.
I agree with most of your post, but the problem is there is a LOT of foreign money coming in and buying US real estate, so like it or not, we do have arb ties internationally. All those strong Euros, GBP and Yuan are causing RE prices to inflate independent of domestic demand, and US currency.
I live in Encinitas, South Carlsbad. A good friend is in real estate. He say that things move with a few days if prices are cut but generally speaking the market is "beyond disaster" What is surprising is that I see few for sale signs although I don't ride around looking either. I think a lot of people have pulled their houses off the market. John
Sure, this has been known to happen. You're friend is right, it's beyond disaster here. Carlsbad / Encinitas is a really nice suburban area, but a little different market than city of San Diego. I've seen a few properties move after a good haircut. There's one property I've been having a laugh at in Scripps Ranch, just east of Mira Mesa. An owner bought his house for $1.4M last summer, and the house right across the street is an REO on the market for $750k. Hilarious! But you're right, it's interesting that in certain areas you don't see all that many for sale signs. I went looking in University City next to La Jolla (very close to UCSD), and man, there's no one except really old people living there since the 1970's! No inventory to be had, even if you got the cash to buy. Like I said, prices depend on state, county, city, and division. RT
It seems were in that part of the cycle where sellers would like to unload their property, but only if they can get a high price. Likely later, it will change to "I'd better discount my price so that I can sell before prices go even lower".
Why compare it to a point-in-time? I could quote you many other things that show how this time is different than the great depression. We don't have double-digit unemployment for starters. Markets move up and down - RE is no different. How do I explain it? It's because the market allowed speculators in some areas to overextend themselves. Now they are paying the price, as is everyone for the bubbles and arrogance created. The market corrects, now just as it did after the great depression. All the Chicken Little's need to relax and take a Xanax. edit: also, I live outside of detroit with the worst unemployment in the US. We didn't have a bubble like California or Florida and guess what: home prices aren't nose-diving like those states. The biggest hit houses in the area are ones I always thought were overpriced: 2500-3000sqft homes on stamp-sized lots going for 400k+. My modest 1400 sqft house I bought in 2005(best school system in the state, 1/3 of an acre lot) for 188k has recent comps for 165k, a shade over 10% correction. It got as low as 160k a few months back according to the comps but has started moving up.
All right now think about this....mortgage rates are still really low 5.75 for a 30 year mortgage. Inflation is out of control. Look at a chart of oil http://bohlish.com/w_Chart.cgi?CL look at at chart of gold http://bohlish.com/w_Chart.cgi?GC Tell me we don't have problems with inflation. What happens when the fed has to raise rates to correct inflation. What happens when mortgage rates hit 10,12 or 14 percent.