10 solid reasons we are FAR from any bottom (agents, sales, housing)

[k374]

10 Reasons Why California is Years Away from a Housing Bottom: Rebuttal to Those Calling for a Bottom for California Housing. » Dr. Housing Bubble Blog

Note: This report is biased towards California but some of it still applies to many bubble markets nationwide (Las Vegas, Phoenix, Florida etc.)

[Mike1306]

The first of his 10 reasons was that because L.A County accounted for 21% of California's sales in 2007 he could then judge the whole of California based on that market.

I stopped reading after that.

[Humanoid]

I stopped reading after that.

Why? Its called sampling. For the technique not to be accurate you'd have to argue that its not a good sample. Simply ignoring the arguments because he looks at Los Angeles as a sample of what is going on in California makes little sense.

Regardless, California real estate still has a long way to fall. The houses are still far from being affordable to most people. Regardless of any other issues people/business will just keep leaving the state until prices become more reasonable. I know I won't stay here if things don't improve over the next few years.

Also, he didn't mention one of the most important reasons prices will continue to decline in California among other places - tighter lending standards. Each month the lending standards get tighter (in reality just going back to normal...) and tighter. Every time this happens more and more buyers get pushed out of the market. I don't think most people aren't buying because "why buy now when the price will be less later", but rather because they simply can't get a loan. If the housing bubble shows us anything is that people are perfectly willing to make house purchases that make absolutely no sense, nothing has changed but lenders willingness to fund the craziness.

[Mike1306]

Originally Posted by Humanoid

Why? Its called sampling. For the technique not to be accurate you'd have to argue that its not a good sample. Simply ignoring the arguments because he looks at Los Angeles as a sample of what is going on in California makes little sense.

Regardless, California real estate still has a long way to fall. The houses are still far from being affordable to most people. Regardless of any other issues people/business will just keep leaving the state until prices become more reasonable. I know I won't stay here if things don't improve over the next few years.

I stopped reading because as I have stated on here many times, making a statement for a large area based on data from one area is useless.

Also that is not an example of sampling. Sampling would be if he took the numbers from one city in NW Cali, one city in NE Cali, one city in SW Cali, etc. and then used the data to formulate something.

Sampling is not used in real estate much at all because market areas can differ so much.

[tamitrail]

Blah, blah, blah. What difference does it make? People like to harp on the gloom and doom. Won't change anything. What will be, will be.

[Humanoid]

Sampling would be if he took the numbers from one city in NW Cali, one city in NE Cali, one city in SW Cali, etc. and then used the data to formulate something.

That would be much worse actually as you could pick cities that were all rather similar. The blog author in this case picked Los Angeles as it has good mix of all sorts of different types of housing. He was not claiming that real estate across California will behave just like Los Angeles, but rather that Los Angeles gives you a decent sample of the entire state, he states:

"10,000,000 people and 88 cities can be looked at as a microcosm of the entire state with low, middle, and high income neighborhoods"

His claim here isn't unreasonable.

[Mike1306]

Originally Posted by Humanoid

That would be much worse actually as you could pick cities that were all rather similar. The blog author in this case picked Los Angeles as it has good mix of all sorts of different types of housing. He was not claiming that real estate across California will behave just like Los Angeles, but rather that Los Angeles gives you a decent sample of the entire state, he states:

"10,000,000 people and 88 cities can be looked at as a microcosm of the entire state with low, middle, and high income neighborhoods"

His claim here isn't unreasonable.

Using one geographic area can not give you a good sample of an entire state, especially one that has a coastline over 700 miles long and an area of over 163,000 square miles.

It is especially useless if you have someone looking for a home in the NE corner of the state in a small town. I ues the area for an example but it can be anywhere in the state or country.

If someone is looking for a home in Davis Creek then what is going on in L.A. will have close to no bearing on them.

[kturbe]

Real Estate is local and buyers and sellers must focus on what is happening in their specific area to determine what is their best move. Sorry, non of my clients care what is happening in Stockton when they are in O.C, much less Santa Ana vs. Newport Beach.

[k374]

actually taking LA as a representation of the entire state of California is more conservative because Central California is MUCH worse than LA. Sacramento, Stockton, Salinas, Fresno etc. are faring terribly and percentage of exotic loans in these areas are far higher than in Los Angeles.

[ViewFromThePeak]

Originally Posted by k374

actually taking LA as a representation of the entire state of California is more conservative because Central California is MUCH worse than LA. Sacramento, Stockton, Salinas, Fresno etc. are faring terribly and percentage of exotic loans in these areas are far higher than in Los Angeles.

Yes, but many CA agents will want to avoid eating humble pie by falsely claiming their area is doing just fine.

Any Raleigh area realtor acts the same way. Of course, the good friend realtors who don't know my bearish outlook on RE candidly tell me the real deal of just how bad it is out there.