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Fitch Ratings has revised it's models and estimates to predict a 25% national level decline in home prices and for certain markets like San Diego, San Francisco and Los Angeles the declines to come are staggering.
Astronomical declines for Southern California are not suprising since the gains were equally astronomical. There are also a HUGE number of loans set to reset starting 2008 Q3, picking up significantly only in 2009 Q3 and peaking in 2010 through 2012 here in SoCal.
I'm no optimist, but I think this is the Chicken Little scenario. In markets where speculation got out of hand, it's certainly possible. However, most of the country won't see this effect. Prices, in my opinion will remain flat.
However, I think one of the paradoxes of today's problem may come in the form of housing shortages in lots of markets over the next several year. Why? Because lots of home builders were driven into bankruptcy over the past two years -- 25%, in fact, by the National Association of Builders. What's more, banks were so badly burned by development loans that capital will be very, very hard to secure outside of private investors.
The result in growing metro markets such as the South? In most markets, the existing overbuilt inventory will be swallowed up over the next 12-18 months. Then what?
Brandon - Steep decline still likely for your sellers
I feel for your sellers but sometimes in life we are given tough breaks.
I am sure your sellers do not see steep declines as a viable solution, kinda like me selling stock at a loss, even though I would have preferred for it to go up. Just because sellers want to see prices not go down much does not mean that prices will not still steeply decline and that a recovery in prices will be years away.
It is too bad for your sellers but it is just something that they are going to have to accept, that prices are going down. I see a fairly steep decline followed by a long flat period before prices start to go up again, slowly.
I think the Carolina's are holding up pretty well so the steep/moderate/mild declines are going to be localized. I think AW's scenario is true for my area. Some continuing mild declines followed by a long plateau.
If that averages nationally to a 25% drop...maybe, maybe not. I think most people agree that we are going to continue to adjust. Anyone's guess as to that national average.
I think the Carolina's are holding up pretty well so the steep/moderate/mild declines are going to be localized. I think AW's scenario is true for my area. Some continuing mild declines followed by a long plateau.
If that averages nationally to a 25% drop...maybe, maybe not. I think most people agree that we are going to continue to adjust. Anyone's guess as to that national average.
Bingo...we actually had a 3% appreciation in my local middle SC market from July 07 to July 08 which is close to our normal 5%. We've had appreciation month to month for the last 2 years w/o a single decline in price. We have had fewer properties listed and a fewer sales in a equal # but no depreciation. I think we'd have had it by now if we were going to. Real Estate is local but some will never believe it.
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Brandon - Steep decline still likely for your sellers
