Comments on: Why There is Hope for the Future http://sandiegohomeblog.com/2008/12/04/why-there-is-hope-for-the-future/ A San Diego Real Estate Web Log Wed, 17 Mar 2010 18:26:50 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Steve Berg http://sandiegohomeblog.com/2008/12/04/why-there-is-hope-for-the-future/comment-page-1/#comment-160761 Steve Berg Mon, 08 Dec 2008 23:45:37 +0000 http://sandiegohomeblog.com/?p=936#comment-160761 Brad - Thanks for the clarification. Brad – Thanks for the clarification.

]]> By: Brad http://sandiegohomeblog.com/2008/12/04/why-there-is-hope-for-the-future/comment-page-1/#comment-160758 Brad Mon, 08 Dec 2008 22:44:19 +0000 http://sandiegohomeblog.com/?p=936#comment-160758 Steve, There are plenty of good non-financial reasons to buy a house even if you think its value will decline in the short term. Nothing in my post contradicts this position. When I say, "act accordingly," I mean just that. If you're on the sidelines and can wait things out, it's probably better to do so. If you can't wait on the sidelines because you have other considerations, just be prepared to accept a loss in the short term. Your interpretation of "act accordingly" as always meaning "wait to buy until the bottom is at hand" is incorrect. Steve,

There are plenty of good non-financial reasons to buy a house even if you think its value will decline in the short term. Nothing in my post contradicts this position. When I say, “act accordingly,” I mean just that. If you’re on the sidelines and can wait things out, it’s probably better to do so. If you can’t wait on the sidelines because you have other considerations, just be prepared to accept a loss in the short term. Your interpretation of “act accordingly” as always meaning “wait to buy until the bottom is at hand” is incorrect.

]]> By: Steve Berg http://sandiegohomeblog.com/2008/12/04/why-there-is-hope-for-the-future/comment-page-1/#comment-160754 Steve Berg Mon, 08 Dec 2008 19:24:40 +0000 http://sandiegohomeblog.com/?p=936#comment-160754 Brad - "The sooner you accept that and act accordingly, the better off you will be." Meaning what? If you have a job transfer and need to sell, don't? An expanding family that needs more space now and wants to own a home for 5-10 years or longer, should rent a larger home for the next 2-3 years? A death or divorce occurs. A marriage occurs. None of these events should result in a home sale or purchase because that may not be acting accordingly? We advise every buyer of the current market trends, as we always have. How long this current trend continues is a matter of pure speculation. It could be six months or as you suggest, longer. But I think it's wrong to condemn a buyer who wants to purchase a home for many good and personal reasons with long term ownership goals. Similarly, there are many reasons an owner may want or need to sell, even absent purely financial reasons. Brad –

“The sooner you accept that and act accordingly, the better off you will be.”

Meaning what? If you have a job transfer and need to sell, don’t? An expanding family that needs more space now and wants to own a home for 5-10 years or longer, should rent a larger home for the next 2-3 years? A death or divorce occurs. A marriage occurs. None of these events should result in a home sale or purchase because that may not be acting accordingly?

We advise every buyer of the current market trends, as we always have. How long this current trend continues is a matter of pure speculation. It could be six months or as you suggest, longer. But I think it’s wrong to condemn a buyer who wants to purchase a home for many good and personal reasons with long term ownership goals. Similarly, there are many reasons an owner may want or need to sell, even absent purely financial reasons.

]]> By: Brad http://sandiegohomeblog.com/2008/12/04/why-there-is-hope-for-the-future/comment-page-1/#comment-160742 Brad Fri, 05 Dec 2008 23:56:27 +0000 http://sandiegohomeblog.com/?p=936#comment-160742 Nothing, and I mean NOTHING - not 4.5% mortgage rates, government-induced principal reductions, foreclosure moratoriums, etc. etc. etc. - is going to stop this housing market's date with destiny: the mean-reverting trends of price-to-income and price-to-rent. You can dance around the issue all day long, but it won't change this fact. And that's still another 15%-20% below where we are. And that's if this is the only bubble in the history of mankind not to go BELOW trend after correcting. As Jeremy Grantham pointed out recently, now including the recent stock market crash, every single bubble of the last 100 years (all 29 of them) reverted back to its fundamental trend. 100%. The sooner you accept that and act accordingly, the better off you'll be. Also, one of the main reasons inventories may appear to be low in some areas is that foreclosures have practically been outlawed. Once the foreclosures start up again, bang, boatloads more inventory. And if these people are able to stay in their houses, the houses still have to be revalued based on the new loan balance. There's no free lunch, folks. Meaningful price declines are still ahead of us for the next 18 months. Nothing, and I mean NOTHING – not 4.5% mortgage rates, government-induced principal reductions, foreclosure moratoriums, etc. etc. etc. – is going to stop this housing market’s date with destiny: the mean-reverting trends of price-to-income and price-to-rent. You can dance around the issue all day long, but it won’t change this fact. And that’s still another 15%-20% below where we are. And that’s if this is the only bubble in the history of mankind not to go BELOW trend after correcting. As Jeremy Grantham pointed out recently, now including the recent stock market crash, every single bubble of the last 100 years (all 29 of them) reverted back to its fundamental trend. 100%. The sooner you accept that and act accordingly, the better off you’ll be.

Also, one of the main reasons inventories may appear to be low in some areas is that foreclosures have practically been outlawed. Once the foreclosures start up again, bang, boatloads more inventory. And if these people are able to stay in their houses, the houses still have to be revalued based on the new loan balance. There’s no free lunch, folks. Meaningful price declines are still ahead of us for the next 18 months.

]]> By: Bears and Bull… — The San Diego Home Blog http://sandiegohomeblog.com/2008/12/04/why-there-is-hope-for-the-future/comment-page-1/#comment-160738 Bears and Bull… — The San Diego Home Blog Fri, 05 Dec 2008 17:04:22 +0000 http://sandiegohomeblog.com/?p=936#comment-160738 [...] or “Why I think Steve is being silly.” Do not think for a minute that this post is not going to get me in some really deep [...] [...] or “Why I think Steve is being silly.” Do not think for a minute that this post is not going to get me in some really deep [...]

]]> By: Steve Berg http://sandiegohomeblog.com/2008/12/04/why-there-is-hope-for-the-future/comment-page-1/#comment-160736 Steve Berg Fri, 05 Dec 2008 02:48:44 +0000 http://sandiegohomeblog.com/?p=936#comment-160736 Uh oh! I'm must be in trouble. The last comment from Kris was many hours ago and I haven't seen her most of the day. Which means she is probably sequestered and preparing a monster comment about how wrong I am. This is not good... Uh oh! I’m must be in trouble. The last comment from Kris was many hours ago and I haven’t seen her most of the day. Which means she is probably sequestered and preparing a monster comment about how wrong I am. This is not good…

]]> By: Steve Berg http://sandiegohomeblog.com/2008/12/04/why-there-is-hope-for-the-future/comment-page-1/#comment-160731 Steve Berg Thu, 04 Dec 2008 22:09:33 +0000 http://sandiegohomeblog.com/?p=936#comment-160731 Jakob - Agreed that this latest shoe to drop is going to prolong the pain. What I am seeing in the field is that there are two different markets happening simultaneously. For example, in the I-15 Corridor, the market for entry level homes (now in the $375k - $500k range) is on fire. We have several buyers in this segment and are running into multiple offers all over the place. Many are short sales and bank-owned, but there is obviously a strong perception of value since these homes are selling quickly and attracting multiple buyers. IMHO, in order to get to a point of market stability, it has to happen from the ground up...starter homes. And that seems to be happening. Although I admit that the base has not yet formed, the characteristics of the market place suggest there is a bottom TRYING to form. So, while I have been humbled and have learned not to be so bullish, I certainly hope that your crystal ball is a little on the conservative side. Please also know that Kris and I greatly appreciate the ideas and the dialogue you and other commenters provide for us and others here. Jakob – Agreed that this latest shoe to drop is going to prolong the pain. What I am seeing in the field is that there are two different markets happening simultaneously. For example, in the I-15 Corridor, the market for entry level homes (now in the $375k – $500k range) is on fire. We have several buyers in this segment and are running into multiple offers all over the place. Many are short sales and bank-owned, but there is obviously a strong perception of value since these homes are selling quickly and attracting multiple buyers. IMHO, in order to get to a point of market stability, it has to happen from the ground up…starter homes. And that seems to be happening. Although I admit that the base has not yet formed, the characteristics of the market place suggest there is a bottom TRYING to form. So, while I have been humbled and have learned not to be so bullish, I certainly hope that your crystal ball is a little on the conservative side.

Please also know that Kris and I greatly appreciate the ideas and the dialogue you and other commenters provide for us and others here.

]]> By: Jakob http://sandiegohomeblog.com/2008/12/04/why-there-is-hope-for-the-future/comment-page-1/#comment-160730 Jakob Thu, 04 Dec 2008 20:43:52 +0000 http://sandiegohomeblog.com/?p=936#comment-160730 Steve, props for admitting you were too bullish in the last few years. My 2 cents is we are still years from a bottom. The increasing numbers of higher-level job losses are not a good sign. As people lose income they spend less and it's a self-reinforcing cycle that unravels the entire service industry ponzi scheme causing more job losses. It is going to be years before we see anything positive. But in many areas there are already amazing deals. I found a deal myself in Lakeside (tho it's a been a bear closing). I'm catching a knife because I want to own and prices are down far enough for me in East County, even tho I know there will be more great deals in the future, I feel like getting started on a new project. BTW, thanks for the blog posts and this forum for discussion. Steve, props for admitting you were too bullish in the last few years. My 2 cents is we are still years from a bottom. The increasing numbers of higher-level job losses are not a good sign. As people lose income they spend less and it’s a self-reinforcing cycle that unravels the entire service industry ponzi scheme causing more job losses. It is going to be years before we see anything positive. But in many areas there are already amazing deals. I found a deal myself in Lakeside (tho it’s a been a bear closing). I’m catching a knife because I want to own and prices are down far enough for me in East County, even tho I know there will be more great deals in the future, I feel like getting started on a new project.

BTW, thanks for the blog posts and this forum for discussion.

]]> By: Steve Berg http://sandiegohomeblog.com/2008/12/04/why-there-is-hope-for-the-future/comment-page-1/#comment-160729 Steve Berg Thu, 04 Dec 2008 20:25:14 +0000 http://sandiegohomeblog.com/?p=936#comment-160729 Jakob - Okay, I haven't been that bad. I did underestimate the magnitude of the price depreciation we have been through here in SD (most others did, too). The Bubbleheads were right about that, as much as it pains me to admit it. But since it is unprecendented, I would hope you could cut me some slack. And, for the record, I am not actually calling a bottom now. I simply ask the question with the implication that it could be months away. I really don't think it's years... Jakob – Okay, I haven’t been that bad. I did underestimate the magnitude of the price depreciation we have been through here in SD (most others did, too). The Bubbleheads were right about that, as much as it pains me to admit it. But since it is unprecendented, I would hope you could cut me some slack. And, for the record, I am not actually calling a bottom now. I simply ask the question with the implication that it could be months away. I really don’t think it’s years…

]]> By: Jakob http://sandiegohomeblog.com/2008/12/04/why-there-is-hope-for-the-future/comment-page-1/#comment-160728 Jakob Thu, 04 Dec 2008 20:11:03 +0000 http://sandiegohomeblog.com/?p=936#comment-160728 Love the back and forth. Almost like I'm in the Berg kitchen. :) Steve, what is this, bottom-call #276? Love the back and forth. Almost like I’m in the Berg kitchen. :)

Steve, what is this, bottom-call #276?

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