patrick.net

6) Not many distressed sales. Homeowners are far more able and willing to try to wait out a bad market.

7) Problematic loans were on longer fuse (5+ years instead of a typical 2 year ARM for subprime).

8 ) The dip in high end markets started almost 2 years after the dip in low end markets.

Maybe it's just that condos were always alternatives for people who were totally priced out of SFR's. Now that price has corrected a little, those same people that would have been in the market for a condo are now looking at SFR's. Everyone else is just on the sidelines for an SFR. There is no demand for a condo anymore.

Thoughts on sfh vs condo:

while price of sfh went up more in absolute dollar, condos enjoyed higher appreciation percentage wise. Like the case shiller graph summarizes above.

Hoa fees. Mortgage down, property tax down, but hoa continues to go up making condos less desirable vs. SFH.

Not much sfh built vs condo recently. How about 100 in San Francisco vs. 100K new condo units the last 10 years. This effect the mix of supply, turnover and ownership history which favors SFH over condos.

Condos are considered starter home. There's not much value between an apartment and a condo. An apartment to a house is more significant, especially a sfh in a good neigborhood. As far as I know, people see tremendous value in 3/2 SFH in good neigborhood and there are still plenty of demands for those kind of properties

ptiemann says

Just look at *recent* comps and forget about what things sold for in 2000. Or any other historic number. Too many things change over time.

I'd agree that "comps" *may* show what you might be able to sell a house for, but it doesn't prove what is the real value of the house.

I would like to point out that if you followed the above recipe in year 2006, you are finding yourself underwater and in a world of hurt right now.

Valuing houses based on "comps" (comparable sales) is a surefire way to disaster. Valuing them based on intrinsic economic value (price/rent, as Patrick often advocates) is the only valid method.

What the hell? Here is from your original post:

"I want some honest opinions."

So, when someone gives you their opinion, you call them out? Why the hell did you ask then?

tatupu70 says

What the hell? Here is from your original post:
“I want some honest opinions.”
So, when someone gives you their opinion, you call them out? Why the hell did you ask then?

Thanks for the reminder. I'll take your opinion as well. :)

tatupu70 says

What the hell? Here is from your original post:
“I want some honest opinions.”
So, when someone gives you their opinion, you call them out? Why the hell did you ask then?

Uh, I am not answering for bubblesitter, but for me the word "honest" is the significant one.

All right guys let's stay on opinions and not attacking each other. :)

justme says

What, now you want to quibble about the definition of the expression “honest opinion”? Okay, I’ll try:
An honest opinion is a meld of fact (objective truth) and personal values.
If the “facts” are not true, then the opinion is not honest. Believing in your own lies of fact does not make your opinion honest.

OK--I'll play along even though your definition of honest truth is ridiculous. What "facts" are not true?

Orange county it is...

Your latest calculation is still wrong, but we both copied one number wrong each (let's call that even). Here are the correct numbers and calculations:

% (75024/58994)**(1/7)
1.03493528961006

% (85730/64573)**(1/7)
1.04131739402802

This means 3.5% and 4.1% for Orange the City, households versus families, not 4% and 4.7% as you say. And definitely not 5%.

Not even with your mistyped number do you get more than 4.1%:

% (85817/64573)**(1/7)
1.04146829175773

There is no way I can guess how you do your calculations, but the numbers that come out are incorrect.

Reference is Wikipedia, which says:

The median income for a household in the city is $58,994, and the median income for a family is $64,573 (these figures had risen to $75,024 and $85,730 respectively as of a 2007 estimate[20]).

http://en.wikipedia.org/wiki/Orange,_California#Demographics_in_2000

I never expected this to be an attacking each other thread. I just wanted honest opinions. Oh well, what can I do?

Falsehoods are not constructive.

mthom says

This is very similar to many parts of the Bay Area: Campbell, better parts of Sunnyvale, better parts of Fremont, and others. Houses were $400k-$500k in 1998, peaked around $900k-$1.1M and have fallen back to $700k-$800k. I think it’s the lack of foreclosures/gov’t intervention and still decently high demand that’s keeping prices from falling further.

More like prices were under $300K in the above areas before 1998. Doubled to $500K and went up again to $700-800K. Factoring in inflation the same 1998 prices adjusted for inflation the same homes would run as much between 300-400K which would be back to 3-4x household incomes.

Because the Gov. is supporting the Housing market. 2) The Banks are not bringing to market all of the foreclosures, 3) The people here have more money to throw away on the thought this is the time to buy and with #2 real prices are not being found. 4) The Mark To Market rule was suspended allowing reason #2 (banks to hold off market)
People if you would look at this like a NEW IDEA and no history, and looking only forward accounting for all the headwinds of our Economy you would likely not think buying a house was a GOOD investment, It might be a good home, But investment? NO way, These areas will be 30% lower then they are today 9/15/2010 by the time the date clock reads 9/15/2013 almost without a doubt. We are in for a HELL of time folks, at least that is how I see it, Housing is just but one area that needs to and in fact will come down in price.