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Old 08-02-2009, 05:18 PM
 
120 posts, read 428,853 times
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Quote:
Originally Posted by MtnSurfer View Post
When prices stop declining for a statistically significant number of months in a row in any given market then that is the indicator.
I guess I don't see it Derek. Home "prices" in CA have increased (albeit negligible amounts) for 3 consecutive months now. So, according to your theory, we have an indicator that we've bottomed out or turned the corner. Then why are there so many homes on the market still unsold. Some homes, like the ones I mentioned earlier are 2.5 years unsold and counting....My personal opinion is that the current ploys of hoarding by banks and lower inventory has given some appearance of a rebound, but unless I start seeing homes sell that have been on the market forever, then I am still unsold (no pun intended) on the price hypothesis
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Old 08-02-2009, 06:13 PM
 
11,715 posts, read 36,663,884 times
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Quote:
Originally Posted by nick2006 View Post
I guess I don't see it Derek. Home "prices" in CA have increased (albeit negligible amounts) for 3 consecutive months now. So, according to your theory, we have an indicator that we've bottomed out or turned the corner. Then why are there so many homes on the market still unsold. Some homes, like the ones I mentioned earlier are 2.5 years unsold and counting....My personal opinion is that the current ploys of hoarding by banks and lower inventory has given some appearance of a rebound, but unless I start seeing homes sell that have been on the market forever, then I am still unsold (no pun intended) on the price hypothesis
The median is skewed by a changing mix of houses being sold. If a few more high end houses close one month, it'll pull the median up and the shills will write another story telling you that you'd better get in now before the market gets away from you. Statistics can also be misleading due to low volume. You'll read something in the paper like "Sales up 200% in zip code X over last year!" Then you look deeper and see one house sold last year, three sold this year, and the historical average is 15 per month. Remember the old saying, "Lies, damn lies, and statistics"?
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Old 08-02-2009, 06:27 PM
 
120 posts, read 428,853 times
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Quote:
Originally Posted by EscapeCalifornia View Post
The median is skewed by a changing mix of houses being sold. If a few more high end houses close one month, it'll pull the median up and the shills will write another story telling you that you'd better get in now before the market gets away from you. Statistics can also be misleading due to low volume. You'll read something in the paper like "Sales up 200% in zip code X over last year!" Then you look deeper and see one house sold last year, three sold this year, and the historical average is 15 per month. Remember the old saying, "Lies, damn lies, and statistics"?
Oh I took probability and statistics in college, so i know all about meaningless statistics. Any hoots, good take. thanks
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Old 08-02-2009, 07:17 PM
 
Location: Vancouver, WA
5,998 posts, read 12,924,731 times
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Quote:
Originally Posted by nick2006 View Post
I guess I don't see it Derek. Home "prices" in CA have increased (albeit negligible amounts) for 3 consecutive months now. So, according to your theory, we have an indicator that we've bottomed out or turned the corner. Then why are there so many homes on the market still unsold. Some homes, like the ones I mentioned earlier are 2.5 years unsold and counting....My personal opinion is that the current ploys of hoarding by banks and lower inventory has given some appearance of a rebound, but unless I start seeing homes sell that have been on the market forever, then I am still unsold (no pun intended) on the price hypothesis
It sounds like what you are describing is an attempt to fabricate a bottom by the parties which may benefit from it such as banks and homeowners. And I do agree that homeowners who may have sold in a decent market are holding out until things rebound. But that still doesn't account for homes which are selling now. And as a former real estate appraiser I can tell you that all the conspiracy theories in the world don't matter. Once you have confirmed sales in any neighborhood which demonstrate current values that is the market for similar homes period. Whether ppl like the numbers or not those are the real numbers. Now thats not to say the market isn't still unstable. But values are still based on current sales - bottom line. Thats what banks lend on and what ppl shopping for a house pay.

Derek
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Old 08-02-2009, 07:21 PM
 
11,715 posts, read 36,663,884 times
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Could this be the much-anticipated dead cat bounce?
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Old 08-02-2009, 07:29 PM
 
120 posts, read 428,853 times
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Quote:
Originally Posted by MtnSurfer View Post
And as a former real estate appraiser I can tell you that all the conspiracy theories in the world don't matter. Once you have confirmed sales in any neighborhood which demonstrate current values that is the market for similar homes period. Whether ppl like the numbers or not those are the real numbers. Now thats not to say the market isn't still unstable. But values are still based on current sales - bottom line. Thats what banks lend on and what ppl shopping for a house pay.

Derek
Hmmm. I have a brother in law that bought in Thousand Oaks (Lynn Oaks area, not Lynn Ranch), for 750K In July 2008. A few months later, an exact same home (2035sqft) sold for 519K. He and his wife were devastated. If you say ..."once you have confirmed sales in any neighborhood which demonstrate current values that is the market for similar homes period" and you also say.... "values are still based on current sales - bottom line. ", then explain what happened in this example?
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Old 08-02-2009, 07:48 PM
 
Location: Las Flores, Orange County, CA
26,345 posts, read 84,701,631 times
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Quote:
Originally Posted by nick2006 View Post
Hmmm. I have a brother in law that bought in Thousand Oaks (Lynn Oaks area, not Lynn Ranch), for 750K In July 2008. A few months later, an exact same home (2035sqft) sold for 519K. He and his wife were devastated. If you say ..."once you have confirmed sales in any neighborhood which demonstrate current values that is the market for similar homes period" and you also say.... "values are still based on current sales - bottom line. ", then explain what happened in this example?
We sold our Colorado home to my employer via the company buyout which is based on the average of two appraisals. (We did this since houses weren't moving in June 2008). Two months after we sold the house, my employer sold it to someone for $117K less than they gave us. (Coincidentally, Derek MtnSurfer visited us in that Colorado home when we both lived in Colorado.)

So, maybe that $519K was some screwy corporate buyout thing or maybe a foreclosure or your brother overpaid or a combination of those.
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Old 08-02-2009, 08:01 PM
 
Location: Vancouver, WA
5,998 posts, read 12,924,731 times
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Quote:
Originally Posted by nick2006 View Post
Hmmm. I have a brother in law that bought in Thousand Oaks (Lynn Oaks area, not Lynn Ranch), for 750K In July 2008. A few months later, an exact same home (2035sqft) sold for 519K. He and his wife were devastated. If you say ..."once you have confirmed sales in any neighborhood which demonstrate current values that is the market for similar homes period" and you also say.... "values are still based on current sales - bottom line. ", then explain what happened in this example?
Actually dinner was calling or I would have elaborated.

I think we have to get back to an accurate definition of the Bottom. My previously stated definition is a statistically significant period in which prices stop declining. This is import because we can talk all day about why prices have dropped continuously during this recession, why they were too high to begin with, why they are still too high for many Californians. But that still doesn't address the primary question ... Have we hit bottom yet?

Your brother-in-laws story is the same as millions of others who bought at the top of the bubble believeing the lie that it is always a good time to buy. This mantra is espoused by many real estate brokers and others in the industry. And a real estate appraisal can only show value for limited window in time. It does not account for crashes or super inflated markets although it does speak to the current trend with regards to value such as a declining market. It is up to the bank's underwriter to look at this current market appraisal and decide if it is a good investment from the bank's point of view. And there are a lot of factors that go into to making that decision such as amount down, credit, income, longer term market trends, potential profit vs. risk taken, etc...

So I wouldn't rely on current sales only in answer to this question. But they still do represent the real market raw data. Further analysis is necessary to take the raw numbers and look for meanful patterns over a longer period of time. That is why it is important to get back to an accurate definition.

I will say that I think it is possible to see some initial plateaus and then drops before stabalization actually occurs. But at some point it becomes obvious we are at the bottom. Another obvious indicator is rising prices. And I am not just talking about outliers but a consistent pattern.

Now do a couple of months of flat numbers meet the definition of the bottom? For me, I would say no. This could easily be a temporary plateau. But if it continues for a longer period with only slight ups/downs in the numbers then it becomes more significant.

My 2c,

Derek

Last edited by MtnSurfer; 08-02-2009 at 09:04 PM..
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Old 08-02-2009, 10:11 PM
 
Location: San Jose
1,044 posts, read 2,433,618 times
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Quote:
Originally Posted by MtnSurfer View Post
accurate definition of the Bottom.
I guess the definition will vary depending on what one wishes to characterize.

Yes, prices have increased over the past few months, but in normal years they always increase in the summer months, so that doesn't prove much.

Also, many have argued that the reason the median price has gone up is because more high-end sellers are dropping their prices, which is causing more sales to occur in that price tier.

That certainly seems to be the case in my zip code. There are sales happening, but in many cases you can see from the price history that the sellers paid $100k to $200k more a few years ago and are losing their shirts on these sales.

Personally, I'm waiting until I see house prices increasing on a year-over-year basis, which is nowhere near happening yet. If that happens AND house prices have dropped to my target range ($500k max) for houses that I would actually want to live in, then great, I'm OK with buying in those circumstances, even if it remains cheaper to rent as it certainly is now.

If prices start increasing year-over-year from their current ludicrous levels, that's when I start seriously considering moving out of state. My gut instinct tells me I don't really have to worry about this scenario. And if I do, then I will be able to buy a house for cash in many parts of the country, which will go a long way toward easing the pain of leaving the great state of California, such as it was.
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Old 08-04-2009, 04:18 AM
 
1,158 posts, read 3,433,981 times
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Quote:
Originally Posted by nick2006 View Post
They credit this supposedly to real estate experts. In my neighborhood, there are about 3 homes that have been on the market since early 2007. That's right...nearly 2 1/2 years. Still unsold. Owners refuse to lower the price. Based on this article, do real estate experts expect these homes will finally sell at their current prices. What does "welcome to the bottom" really mean? My wife thinks our neighbors are 300-400K overpriced.
The fact is that the bottom is still a ways off. There have been increases in sales, but the media also does not tell you what prices those transactions have gotten or where they were. I suspect that we are talking at a minimum 50% off peak. Many of these transactions have involved so-called "vulture capital" companies, too.

And things would be worse if the banks were more realistic and willing to sell properties they have foreclosed on for their new market valuation rather then holding them off the market until things improve. In other words, the banks are attempting to create an artificial shortage in an attempt to slow the decline in prices.

At some point, shareholders are going to demand that said inventory be put up for sale and that will add to the total inventory, which will then drive prices down further.

Also, the upper end of the RE market is about to reset, which will then drive everybody down. So don't believe the realtor hype. They and the media are blowing smoke.
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