patrick.net

Glen,

You're probably right, especially so for the "prime" areas. Las Vegas? Phoenix? No so "prime". They'll probably free fall. I don't subscribe to the theory though that each and every re-set needs to result in a default for this to A) be meaningful or B) take forever.

Dinor,

I agree...we won't need for the last of the resets to happen for semi-sane prices to return. A tightening of credit should drive down demand, just as the defaults of marginal FBs, excess new construction, etc. add to supply.

However, I wouldn't anticipate a recovery (ie: appreciation) until at least '10 or '11. Maybe later. Because all of the resets will continue to add supply over an extended timeframe and I don't see how we could get a spike in demand to absorb all the new supply.

If you buy in '08 or '09, you will probably be able to get a decent price. But you won't get any appreciation for a while thereafter, IMO.

not to be a dick, but that $1M open lot in Palo Alto has a good reason to be sold for higher-than-average per acre price for city lot. I am not saying it is justified, I am just trying to explain why they are asking such ridiculous price.

Right now, for areas that I track (Los Altos, west Cupertino, west Saratoga, Los Gatos and west Almaden), lots are going for around $2M per acre for flat land. If the slope is 45 degrees steep, of course the price is a lot cheaper. However, undeveloped city lot in Palo Alto goes much higher, as shown in this example, pretty much $3M per acre.

The reason is because of the nasty Palo Alto city codes, it is excruciatingly difficult to tear down a house, in fact, it is almost impossible to tear down a home. All the buyers of these run-down shacks in Palo Alto who plan to tear down and rebuild are in for a big surprise, because they need to battle for months, if not years to get their permit. Therefore, land with no structure on it is far more desirable than those with structure.

In a sense, the city building codes skew the market for urban lots. If you go out to outlying places, for example, Gilroy (my favorite example), you can do whatever you want because Gilroy has very laissez-faire codes, so a flat lot asking for $500K per acre is having trouble finding any buyers. There are hundreds of lots in that price range for sale in Gilroy, and I suspect if the price will easily drop back to $100K per acre, which was the case 3 years ago.

Funny and sad post allah. "hell i'd beg borrow or stgeal at this point". Seems to me, that's what got her in this mess in the first place.

Here is what I found from BusinessWeek

http://www.businessweek.com/common_ssi/map_of_misery.htm

Seems California is peppered with payment options loans. Seems like 30-40% is common.