Comments on: Bubbleheads, Prognosticators and Shrinkage http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/ A San Diego Real Estate Web Log Sat, 13 Mar 2010 21:29:14 -0600 http://wordpress.org/?v=2.8.4 hourly 1 By: Steve Berg http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/comment-page-1/#comment-159396 Steve Berg Mon, 21 Jul 2008 02:40:13 +0000 http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/#comment-159396 Jim: I can only say that you're correct. The magnitude of adjustment was and is greater than many (not all) expected. The magnitude of mortgage problems that were revealed in August, '07 was the 2nd shoe to drop. Living and working through the preceeding years that led up to last August, I remember wondering how so much money was being pushed out the doors of lenders and the many conversations Kris and I had, thinking "this is too easy." Well, it was and now the price is being paid big time by many people. This period is becoming a case study that will/should be in every college business school in the country of how not to run a financial/mortgage-backed securities system. It's not over and it continues to unfold as we speak... Jim: I can only say that you’re correct. The magnitude of adjustment was and is greater than many (not all) expected. The magnitude of mortgage problems that were revealed in August, ‘07 was the 2nd shoe to drop. Living and working through the preceeding years that led up to last August, I remember wondering how so much money was being pushed out the doors of lenders and the many conversations Kris and I had, thinking “this is too easy.” Well, it was and now the price is being paid big time by many people. This period is becoming a case study that will/should be in every college business school in the country of how not to run a financial/mortgage-backed securities system. It’s not over and it continues to unfold as we speak…

]]> By: Jim Lundberg http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/comment-page-1/#comment-159392 Jim Lundberg Mon, 21 Jul 2008 00:06:32 +0000 http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/#comment-159392 Seems to me that the "Bubbleheads" were correct. And the dropping continues. Remember that if you start with 100,000 and go 50% up, going back down to 100,000 is only a 33% drop!!!! Also the deflation of the value of the dollar means that homes are selling for LESS than we started with when this Federal Reserve Chairman took the reins. So NOW they say they should control the loans more..... Seems to me that the “Bubbleheads” were correct. And the dropping continues. Remember that if you start with 100,000 and go 50% up, going back down to 100,000 is only a 33% drop!!!! Also the deflation of the value of the dollar means that homes are selling for LESS than we started with when this Federal Reserve Chairman took the reins. So NOW they say they should control the loans more…..

]]> By: Northern Virginia Real Estate Guide http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/comment-page-1/#comment-6241 Northern Virginia Real Estate Guide Fri, 01 Dec 2006 19:36:09 +0000 http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/#comment-6241 <strong>A well stated perspective on market forecasting...</strong> Finding a great Blog is intriguing because I get to read all the good stuff that I missed not knowing about it. This is a case in point. Steve Berg of the San Diego Home Blog (and husband of Kris Berg, see a previuos article) wrote this piece...... A well stated perspective on market forecasting…

Finding a great Blog is intriguing because I get to read all the good stuff that I missed not knowing about it. This is a case in point. Steve Berg of the San Diego Home Blog (and husband of Kris Berg, see a previuos article) wrote this piece……

]]> By: Average Prices Up 1.8% in Scripps Ranch: Bubbleheads Beware · BawldGuy Talking http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/comment-page-1/#comment-5520 Average Prices Up 1.8% in Scripps Ranch: Bubbleheads Beware · BawldGuy Talking Thu, 16 Nov 2006 21:41:54 +0000 http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/#comment-5520 [...] Steve Berg over at The San Diego Home Blog wrote a solid piece yesterday outlining the Scripps Ranch area of San Diego. It’s in the northern part of the county and sports slightly higher median prices and demographics, though not outrageously so. [...] [...] Steve Berg over at The San Diego Home Blog wrote a solid piece yesterday outlining the Scripps Ranch area of San Diego. It’s in the northern part of the county and sports slightly higher median prices and demographics, though not outrageously so. [...]

]]> By: Steve Berg http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/comment-page-1/#comment-5475 Steve Berg Wed, 15 Nov 2006 22:12:28 +0000 http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/#comment-5475 Ageed sdcellar! If I had not been so lazy, I would have taken it to the next logical metric and broken out my per sq. ft. #'s by home size (i.e., 1,000-2,000 sq.ft., 2,000-3,000 sq. ft., etc.). Beyond that we get into Anti-Zillow land - location, views and upgrades, which, I agree are important. I just wanted to take it one important step beyond the DataQuick's of this world to demonstrate that these widely published numbers should not be taken to the bank. It selfishly also reinforces why I have a job, a job that's getting fairly busy right now, BTW. Ageed sdcellar! If I had not been so lazy, I would have taken it to the next logical metric and broken out my per sq. ft. #’s by home size (i.e., 1,000-2,000 sq.ft., 2,000-3,000 sq. ft., etc.). Beyond that we get into Anti-Zillow land – location, views and upgrades, which, I agree are important. I just wanted to take it one important step beyond the DataQuick’s of this world to demonstrate that these widely published numbers should not be taken to the bank. It selfishly also reinforces why I have a job, a job that’s getting fairly busy right now, BTW.

]]> By: sdcellar http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/comment-page-1/#comment-5474 sdcellar Wed, 15 Nov 2006 21:43:00 +0000 http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/#comment-5474 Many other zip codes in San Diego (as I'm sure you know) tell a different story using average price per square foot metric. While I agree that it's a better metric than median sales price, it does suffer notable limitations based on exact properties. Specifically, it does not capture lot size and other location related premiums. To test the theory out, I went ahead and looked at each individual sale in 92131 for the month of October and found that, indeed, a suprising number of those properties were better than average locations. Specifically, half were on cul-de-sacs, and about 5 more were on either large lots, end lots, or view lots. As one might expect, the better lots fetched more per square foot. I know these numbers are small (5, for example), but when there were only 15 or 16 sales (hard for the layman to tell), that's the best I can do. I wouldn't think this would be the typical mix of homes normally, but I'm also not surprised as one would think that in this market, the premium properties would tend to move first (and most). Many other zip codes in San Diego (as I’m sure you know) tell a different story using average price per square foot metric. While I agree that it’s a better metric than median sales price, it does suffer notable limitations based on exact properties. Specifically, it does not capture lot size and other location related premiums.

To test the theory out, I went ahead and looked at each individual sale in 92131 for the month of October and found that, indeed, a suprising number of those properties were better than average locations. Specifically, half were on cul-de-sacs, and about 5 more were on either large lots, end lots, or view lots. As one might expect, the better lots fetched more per square foot. I know these numbers are small (5, for example), but when there were only 15 or 16 sales (hard for the layman to tell), that’s the best I can do.

I wouldn’t think this would be the typical mix of homes normally, but I’m also not surprised as one would think that in this market, the premium properties would tend to move first (and most).

]]> By: The San Diego Home Blog » Blog Archive » Say What? http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/comment-page-1/#comment-5464 The San Diego Home Blog » Blog Archive » Say What? Wed, 15 Nov 2006 18:55:58 +0000 http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/#comment-5464 [...] For those who took the time to actually read the piece, it said exactly what Steve said here on Thursday; we are seeing signs that buyers are starting to move off the sidelines, perceiving an attractive balance of favorable interest rates and lower pricing. However, the title of the article is inconsistent with the citations that follow and misleading to anyone who chose not to investigate further. Slide in housing prices halts, and buyers reduce inventory [...] [...] For those who took the time to actually read the piece, it said exactly what Steve said here on Thursday; we are seeing signs that buyers are starting to move off the sidelines, perceiving an attractive balance of favorable interest rates and lower pricing. However, the title of the article is inconsistent with the citations that follow and misleading to anyone who chose not to investigate further. Slide in housing prices halts, and buyers reduce inventory [...]

]]> By: El Dorado and Amador County Real Estate » Blog Archive » Bubbleheads http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/comment-page-1/#comment-5346 El Dorado and Amador County Real Estate » Blog Archive » Bubbleheads Sun, 12 Nov 2006 19:34:52 +0000 http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/#comment-5346 [...] Especially lately, with three escrows open, two more referrals to close, and another offer in the pipeline, I’ve been feeling like I’m on a pretty handy little roll here. Lately there’s been some excellent writing around about the folks who want to wait and the folks who are already taking advantage of the bargains that we’re starting to see.  Steve Berg had a great article recently were he talks about the Bubbleheads in the San Diego market and the  shrinkage of inventory.  I share Steve’s opinion that: The moral of this story is that trying to anticipate the future market and precisely when may be the perfect time to buy or sell is a losing proposition. [...] [...] Especially lately, with three escrows open, two more referrals to close, and another offer in the pipeline, I’ve been feeling like I’m on a pretty handy little roll here. Lately there’s been some excellent writing around about the folks who want to wait and the folks who are already taking advantage of the bargains that we’re starting to see.  Steve Berg had a great article recently were he talks about the Bubbleheads in the San Diego market and the  shrinkage of inventory.  I share Steve’s opinion that: The moral of this story is that trying to anticipate the future market and precisely when may be the perfect time to buy or sell is a losing proposition. [...]

]]> By: Jack Tong http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/comment-page-1/#comment-5310 Jack Tong Sun, 12 Nov 2006 08:40:27 +0000 http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/#comment-5310 for san diego county inventory. in 2005, the fall-winter inventory drop starting in september was 12%. in 2006, the fall-winter inventory drop so far has also been 12%. in all likelihood this winter's seasonal inventory drop will be much more than last year because this year's "testing the market" crowd was also much more. "testing the market" crowd do not like to keep "testing the market" during the holiday season. it took 5-6 years to reach record high inventory during the last downturn. it took 2 years to do so for this cycle. a lot of the listings were a direct response to the record high prices too. the problem is when the "testing the market" crowd leaves for good and is replaced by steady increasing amount of "need to sell" folks, that new inventory peak will be a true peak that will not so easily melt away during the wintertime. true buyers don't like to wait, and many will jump and catch the falling knife. to wait requires a lot of discipline and a lot of homework to study the numbers and the trend. one thing that will start coming out is just how much mortgage fraud is truly out there. mortgage fraud created artificial demand, and thus artificial price increases. these mortgage fraud will turn into foreclosures, and turn into "need to sell" inventory that will replace the departing "market testers." the news regarding the true prevalence of mortgage fraud will also further damage buyer psychology. I'm expecting a lot of quietness until the end of the year. I'm looking at 19,000 homes by the end of the year for SD, still 5000 higher than same time last year. the key to which way the market will turn will be how inventory behaves after 1/1/2007. for san diego county inventory. in 2005, the fall-winter inventory drop starting in september was 12%. in 2006, the fall-winter inventory drop so far has also been 12%.

in all likelihood this winter’s seasonal inventory drop will be much more than last year because this year’s “testing the market” crowd was also much more. “testing the market” crowd do not like to keep “testing the market” during the holiday season.

it took 5-6 years to reach record high inventory during the last downturn. it took 2 years to do so for this cycle. a lot of the listings were a direct response to the record high prices too. the problem is when the “testing the market” crowd leaves for good and is replaced by steady increasing amount of “need to sell” folks, that new inventory peak will be a true peak that will not so easily melt away during the wintertime.

true buyers don’t like to wait, and many will jump and catch the falling knife. to wait requires a lot of discipline and a lot of homework to study the numbers and the trend. one thing that will start coming out is just how much mortgage fraud is truly out there. mortgage fraud created artificial demand, and thus artificial price increases. these mortgage fraud will turn into foreclosures, and turn into “need to sell” inventory that will replace the departing “market testers.” the news regarding the true prevalence of mortgage fraud will also further damage buyer psychology.

I’m expecting a lot of quietness until the end of the year. I’m looking at 19,000 homes by the end of the year for SD, still 5000 higher than same time last year. the key to which way the market will turn will be how inventory behaves after 1/1/2007.

]]> By: Average Prices Up 1.8% in Scripps Ranch: Bubbleheads Beware « Behind The Curtain http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/comment-page-1/#comment-5166 Average Prices Up 1.8% in Scripps Ranch: Bubbleheads Beware « Behind The Curtain Sat, 11 Nov 2006 00:19:04 +0000 http://sandiegohomeblog.com/2006/11/09/bubbleheads-prognosticators-and-shrinkage/#comment-5166 [...] Steve Berg over at The San Diego Home Blog wrote a solid piece today outlining the Scripps Ranch area of San Diego. It’s in the northern part of the county and sports slightly higher median prices and demographics, though not outrageously so. [...] [...] Steve Berg over at The San Diego Home Blog wrote a solid piece today outlining the Scripps Ranch area of San Diego. It’s in the northern part of the county and sports slightly higher median prices and demographics, though not outrageously so. [...]

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