Comments on: Guest Post: Predicting the unpredictable: How far will prices fall?

By: ????

???? — Wed, 20 May 2009 08:08:49 +0000

Probably one of the hardest things anyone can do is try and learn something new. Congrats to anyone who tries.

By: Auds

Auds — Sun, 09 Sep 2007 03:41:28 +0000

While there are “people who could qualify for the expensive homes and the prices” as Kaye stated, there are also plenty of people who “bought” them when they couldn’t. There is no shortage of homes in the Bay Area where people purchased a home less than a year ago and the same home is currently listed for $30,000-$100,000 less than the last purchase price. Cross reference craigslist postings and zillow recent sales and you’ll see what I mean. The further you get away from the city, the more of these you see.

By: Bubblewatcher

Bubblewatcher — Fri, 07 Sep 2007 17:31:33 +0000

While it’s true that certain areas in particular will probably get hammered more than others, it’s also true that real estate transactions are on a kind of ladder, where the ones at the top ultimately depend upon the ones at the bottom in order to happen. During the last downturn, homeowners in Beverly Hills and Santa Monica all thought they were immune from the housing bust contagion that spread through Hawthorne and Lawndale…until they, too, were caught up in the slowdown. The explanation is pretty simple: typically, in order to move up to a nicer place, the buyer has to sell their lesser abode, and so on up the ladder. As I recall, the Great Housing Bust of 1990-1996 didn’t hit the westside of L.A. until about 1994-1996, but when it did hit, it hit with a vengeance — Orange County didn’t even begin to recover until 1997, according to this link:
http://www.rntl.net/history_of_a_housing_bubble.htm

It’ll be interesting to see if history repeats itself. Especially in light of today’s recession-implying employment figures and the fact that this latest bubble is even bigger than that last one.

By: Kaye Thomas

Kaye Thomas — Fri, 07 Sep 2007 02:57:24 +0000

Peter is right.. it’s often difficult for consumers to understand that there are people who could qualify for the expensive homes and the prices and they are not going into foreclosure

By: Hezekiah King

Hezekiah King — Fri, 07 Sep 2007 02:34:14 +0000

THE BIGGER THEY ARE, THE HARDER THEY FALL

The biggest price drops have been in areas heavily financed by subprime loans – for now. Watch for the “prime” areas to get hit next and get hit even harder.

Problems with jumbo loans and improved underwriting standards will finish off the wealthier neighborhoods.

Here is my prediction:

Nationwide, -15%
California, -30%
Inland Valley, -40%
Los Angeles, -50%
Manhattan Beach, Beverly Hills, Santa Monica, etc., -60%

(Peak-to-trough Case-Shiller Home Price Index)

By: Pete Viles

Pete Viles — Thu, 06 Sep 2007 21:56:36 +0000

Morgan — enjoy your time back East. It’s a pleasure to be part of your blog.

Pete

By: Aaron Fischer

Aaron Fischer — Thu, 06 Sep 2007 18:00:38 +0000

I wonder if there will be investors around to pick up old sub prime property for rental units.

By: The Mortgage Consultant

The Mortgage Consultant — Thu, 06 Sep 2007 15:58:14 +0000

I agree with you that there will be pockets of areas that will see much greater value loss than others. I am in the central valley of California, and we are going to take a beating. Stockton, Modesto, and Sacramento are in the top 10 for highest foreclosure ratings in the nation. You are also correct that the subprime loans are the largest defaulting loan (we will see what happens when option arms start their recast). What we can hope however is that some of the neighborhoods, especially here, were not what you would call “typical” of sub-prime lending. If FHA would raise the loan limit $25k, you could see homes that are being lost to foreclosure, open up to first time homebuyers or even move up buyers using more conventional financing.