Does the market for realty go down in the L.A or San Diego or San francisco area?

Question

i read an current article that is its going down irronically...is there a certain time to buy lower prices? or does it just go higher and higher? or does it fluctuate and go back up and stuff?

Answer 1

Southern California housing market is already negative in year over year medium price. So, we don't need address it separately.

Let's talk about the San Francisco Bay area.

SF Bay area housing market is going through the early stage of correction. It is likely to take a couple years to resolve.

During 1990's there were times when housing market in SF Bay area went negative. It started in 1990 and sellers, who entered the market at that time, had to wait until 1997 to unload their property with a gain.

Today, in 2006, we are in the early stage of another housing correction . Please see this page:
http://www.viewfromsiliconvalley.com/id157.html

The "Year over Year" medium price for San Mateo is -2.0%. If we consider inflation, then that is -5.5%. Because inflation tops 3.5%. For Santa Clara county, the gain is only 1.7%. That is lowest ever in the past 5 years. If we count inflation in our valuation, then it is -1.8%.

In addition, sales volumn drops dramatically, which means high end properties garnished most of sales, keeping the medium price high. While less appealing properties stays on the market longer and longer.

Inventories build up as sales down. Inventory for single family grew to 2222 units in July from 1500 in January this year. Condo inventory grew from 658 to 841 units by July from January. Why is inventory growing while summer is suppose to be a good selling season.

It is true that Silicon Valley is less sensitive to high rates, because engineers have more income. I doubt they can escape the correction though. They certainly didn't during dot-com in 2000 bust.

Finally, one more example.
If you go to http://www.mlslistings.com/, the listing MLS#: 648284 dropped their asking price from $565 to $535 in one month. This property locates in Sunnyvale, the heart of Silicon Valley.

How much will real estates drops in Silicon Valley?

Housing market continues to slump. Now we can calculate true value of a property easily. As price decline, we don't need to guess and factor in the potential price appreciation while calculating home value. Without the guesswork, figures are more accurate.

Let's use following example:

Today, a typical 15 years old, two bedrooms condo/townhouse is priced around $500,000 and $550,000 in Sunnyvale, California. Rent for similar condo/townhouse is $2000/month.

If you are a home owner, $2,000/month in rent means $20,000 a year in profit ($24,000 per year in rent, minus $4,000 maintenance costs). A $20,000 income is equilevant of owning $400,000 bonds or CDs, because current yield of 30 Years U.S. treasuries are 5% (5% of $400,000 is $20,000). Bank CDs have similiar yields.

In our example, the two bedrooms condo/townhouse is 20% to 25% overpriced. They should be priced at $400,000.

It is interesting to note that if we redo the calculation from buyer's perspective instead of seller's perspective, the figures are even more shocking.

Mortgage payment consists of two parts: mortgage interests and mortgage principal. The interests portion is similar to rent. If you pay interest, it disappears and doesn't add equity to the property. To fully simulate characteristics of renting, we assume buyer will apply for a zero down, interest-only loan.

It turns out that rent of $2000/month is equivelant to mortgage payment of a $340,000 loan at 7.0% APR. And comparing $340,000 loan to $500,000 or $550,000 price tag, from buyer's view, the two bedrooms condo/townhouse is 30% to 35% overpriced.

One may ask, why is there a discrepancy between two perspectives of the buyer and owner?

The discrepancy is a result of 2% differences in interest rate that buyer borrow comparing to yields of bonds and CDs that owners would get. We understand that buyer would always pay more. That is the premium of buying to own. However, looking from home owner's perspective, current housing market is probably 20% to 25% overpriced. We recommand investors to wait for a better entry point.

Answer 2

I study both San Diego and Orange County markets and I am seeing a decline in home pricing. In some areas, the prices have dropped to October 2004 prices.

Regards

Answer 3

The real estate market in CA. is a bit shaky because so many people took out ARM's (Adjustable Rate Mortgages) and the rates have gone up making their monthly payment much more. Some are bailing out, making it easier to purchase a home for a good price in some areas.

If the economy holds, rates don't go up and people have jobs, the market will hopefully hold and we won't see a crash.

There are different things that affect the real estate markets in different states, counties and towns.

Answer 4

I live in San Diego and for the most part I think it stays pretty stable which = expensive. I have heard that San Diego is more expensive than LA in most areas (believe it or not). San Francisco I would love to live there but is always going to be ridiculous.

Answer 5

In all honesty, you ought to head to San Diego. I hate to assert it because of the fact an incredible type of human beings want to return right here besides and its keeps getting greater populated with human beings from out of state or city for that count, yet i might hate to lie and make it easier to know that San Francisco is the greater effective determination. are not getting me incorrect, i like SF and that i plan to circulate to college there to flee parental administration. San Diego's climate is quite lots the final interior the country. (thoroughly biased, yet its additionally actual). human beings indexed below are so laid back and exciting. all of us understand the thank you to have a stable time and its very distinctive and accepting. i do no longer understand approximately doing community college out right here, it is not extremely the final except you're thinking approximately doing the circulate application to a UC college. between the cons may well be the outrageous value in gasoline, yet SF would not be lots greater effective, in spite of the fact that i might think of it would be a sprint much less complicated to get around in case you had like a motorbike or something. San Diego is in all probability between the final places for college youngsters. residing in San Diego is approximately having a stable time and taking area in existence on a similar time as working to get your stuff achieved. i could no longer think of of a greater effective place to circulate to college, or stay. Its magnificent. i like it. i'm going to on no account completely go away. (to no longer point out meals is scrumptious, in case you want actual mexican meals in simple terms jump over the border for an hour... or in simple terms ask a pal - that is going for all varieties of Asian meals too. Mmmmm so stable!)

Answer 6

It is a cycle. We are somewhere in the down cycle. I feel we are close to the bottom. We should start to see prices come up in 1 to 2 years. Be Ready!!!

http://www.realestateagentlive.com/

Answer 7

it is all a cycle ............it will be on the rise again .

cheers ...........