Continued Housing Woes (Riverside, Orange, San Luis Obispo: real estate market, foreclosure, renters)

[Vascodagama]

Originally Posted by bulldogdad

The bottom has been hit. We are currently scraping along the bottom with some areas bumping up a bit and some bumping down. NOW is the time to get into a property actually Nov-Dec 2009 was probably to lowest of the low. In about 12 months you'll be kicking yourself if you don't.

You can't be serious. Home prices hasn't dropped this fast in over two years.
In my area, 32% of the homes listed are disressed. In Mission Viejo 48% disressed, Lake Forest 57%, Rancho Santa Marg 64%. If you look around you probably noticed for sale signs going up everywhere. Either people are defaulting or they want out now before they are upside-down.

[EscapeCalifornia]

[proudmommy]

Originally Posted by KC6ZLV

"Record numbers of investors and cash-buyers in January drove Sacramento County home sales to normal levels for the month but dragged down the median sales price to tie a 10-year low."


Source: Investors, cash-buyers flock to Sacramento-area home market - Sacramento Business, Housing Market News | Sacramento Bee (http://www.sacbee.com/2011/02/18/3412632/investors-cash-buyers-flock-to.html - broken link)

If every house sold for more than it did last month (which necessarily means the value of houses went up) but a higher portion of lower priced homes sold than higher priced homes, the median can go down even though everyone became wealthier on paper or for real.

Median isn't a very good metric to assess the direction housing value is going.

[proudmommy]

On the Case Shiller chart showing the price index versus years, even though there was a bubble and a bursting bubble, the latest data point (looks like maybe $170K for 2011) would be a linear appreciation of about 5% since the 2000 data point of $100K.

Had it averaged 4% (sort of a historical average) instead of 5% then the 2011 value would be $153K or an overprice of $17K ~ 10%. So if we use 4% as a reference of what "normal" is, then we might expect housing prices (based on that graph) to fall 10% or so.

Here are the project prices ($K) at 4%, so in a couple years the curves could meet.

$154 2011
$160 2012
$167 2013
$173 2014

[EscapeCalifornia]

Originally Posted by proudmommy

On the Case Shiller chart showing the price index versus years, even though there was a bubble and a bursting bubble, the latest data point (looks like maybe $170K for 2011) would be a linear appreciation of about 5% since the 2000 data point of $100K.

Had it averaged 4% (sort of a historical average) instead of 5% then the 2011 value would be $153K or an overprice of $17K ~ 10%. So if we use 4% as a reference of what "normal" is, then we might expect housing prices (based on that graph) to fall 10% or so.

Here are the project prices ($K) at 4%, so in a couple years the curves could meet.

$154 2011
$160 2012
$167 2013
$173 2014

Those are index values, not dollar amounts.

[Vascodagama]

Originally Posted by proudmommy

If every house sold for more than it did last month (which necessarily means the value of houses went up) but a higher portion of lower priced homes sold than higher priced homes, the median can go down even though everyone became wealthier on paper or for real.

Median isn't a very good metric to assess the direction housing value is going.

You might want to look up what median price home means.
When the median price goes up or down the higher end homes will have more extreme variations.

[proudmommy]

Originally Posted by EscapeCalifornia

Those are index values, not dollar amounts.

I know, I shouldn't have used dollars but the meaning is the same. I just used dollars and should have been unitless.

[proudmommy]

Originally Posted by Don9

You might want to look up what median price home means.
When the median price goes up or down the higher end homes will have more extreme variations.

Median is the price at which half the homes sold for more and half sold for less.

Let's say last month, one Type A house sold for $1 and one Type B house sold for $10, the median is $5.5 dollars.

This month five Type A houses sold for $2 and one Type B house sold for $20. The prices doubled. But the median goes down from $5.5 to $2.

So, like I wrote above, Median isn't a very good metric to assess the direction housing value is going.

[Vascodagama]

Originally Posted by proudmommy

Median is the price at which half the homes sold for more and half sold for less.

Let's say last month, one Type A house sold for $1 and one Type B house sold for $10, the median is $5.5 dollars.

This month five Type A houses sold for $2 and one Type B house sold for $20. The prices doubled. But the median goes down from $5.5 to $2.

So, like I wrote above, Median isn't a very good metric to assess the direction housing value is going.

This is why you can't use such a small sample size in statistics. Your argument is flawed and misleading. Median home price is the most widely used measurement in the industry. It is used because it is not influenced by small numbers of high priced homes.

And if you think home values in SoCal have increased in the past few months I want what your smoking.

[KC6ZLV]

Originally Posted by proudmommy

If every house sold for more than it did last month (which necessarily means the value of houses went up) but a higher portion of lower priced homes sold than higher priced homes, the median can go down even though everyone became wealthier on paper or for real.

Median isn't a very good metric to assess the direction housing value is going.

The median price is a sample of what was sold for a given time frame. It doesn't matter if people become wealthier on paper. How much people spend, on average, is what matters. Your example of people spending $2 vs $1 and $20 vs $10 is an example of more people buying houses at lower prices. It could possibly indicate people don't have the money or the qualifications to purchase higher-end homes, or they are being cautious about spending an excessive amount on a home due to economic conditions.

In the link I posted, Sacramento's median house value went down because people are buying the least expensive homes. People aren't buying many homes above some priceline (probably the low $200-thousands) because they no longer have the money, they realize a first house is a place to live long before it is an investment (they don't want to lose money), they have learnt investments of any kind, including real estate, carry a risk they aren't willing to take, and many other reasons.