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Brand Says:
> I believe that prices will come down, because
> that is the inevitable outcome of a bubble. Things
> generally cannot plateau at an astronomical price.
> Perhaps Randy or others can cite instances where
> this has happened.
I have never heard of any “bubble†hitting a “plateau†without a solid reason (say the average wage in a remote area going up after a large company moves there).
Looking at the link Jimbo posted with median home priced reminded me that high end homes in La Jolla, Hillsborough and Ross were selling for ~$1mm in 1989 (~5x the median) and dropped a lot more than average/median homes by 1994. In the current bubble cycle I’ve noticed that high end homes in La Jolla, Hillsborough and Ross are pushing $5mm (almost 10x the median). I’m wondering if these homes will drop as much this time and if watching the price of homes nearby drop by $500K a year will make more people run for the doors (and sell making things drop even faster) than the drop of “only $100K a year†back in the early 90’s…
FAB, you really can't compare gold standard prices to "currency" economy prices. The gold standard stabilized the prices on durable goods for a dozen decades.
btw, someone at work said that FDR actually took us off the gold standard? I thought that this move is oft attributed to Nixon? But gold was siezed by the government in the 1930's, IIRC. Perhaps one of our resident goldbugs can clear up the history at work?
FAB, yeah I thought it would work itself out that way, too, that is why I bought TOL puts.
I did okay, but I would have done better buying KBH puts.
I guess the global redistribution of wealth upwards has helped maintain the price of high end homes. Let's see if that continues.
My dream house is "only" $2M anyway, so I don't think I am going to be helped much either way...
Jimbo: One thing I have often wondered is how many super-expensive homes get resold? They are often uber-customized for the original owner. It seems just as likely that someone who wants to build a $4M home would acquire the appropriate land and then build their own "perfect" home.
Of course, if you're going to buy or build a $4M home, then money probably isn't a concern anyway...
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From a Malcolm S in San Diego:
#housing