The mean price trendline: the home price anchor
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California home prices rose in all tiers in February 2013. However, prices remain down significantly from prior years, and thus nearer to the mean price trendline. Pricing was at its lowest in early 2009, but it remains low now. It has recently shown none of the dramatic falls of 2007-2008 or the rises of the early 2000s. While home prices have increased quickly this past year, particularly among low-tier properties, this is primarily due to speculator activity and will prove unsustainable by late 2013.
Prices will bottom just below the mean price trendline in late 2014. The next price peak will occur in mid- to late-2016 in a delayed response to rising employment and sales volume.
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Connor P. Wallmark
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I think that the real estate market has much further down to go beyond 10%-15% in price and in market psychology. If you look at the chart by Dr Jean-Paul Rodrigue’s, economist at Hofstra University, of the main stages of a bubble it is very close to the chart you show of CA home prices, up to the present. The bubble ends with the current blow off Stage. The last part involves capitulation and then at the bottom despair. Were not there yet. We have been to Ca real estate will never go down. The opposite extreme is it will never go up. Not even close to there yet. There is a consensus now that the bottom is in sight, not capitulation and not despair.
Also from the chart of the Bubble Theory, the bottom occurs below where the bubble started. That would bring prices below 1997 prices. Such a move would be certain to elicit capitulation and despair.
The Bubble Theory Chart is available online in a Financial Times article about the British real estate bubble: http://ftalphaville.ft.com/blog/2009/03/12/53476/bubble-theory-and-uk-housing
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As a broker, I am amazed in the amount of quality information you give away. This is information every investor
in Real Estate should see as to what the future might hold.
Do I have your permission to share this information with my clients?
Richard Guess
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Dear Richard,
Absolutely. You are encouraged to share this information and all other articles, with credit given to first tuesday Journal Online.
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Regards,
Editorial Staff
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Thanks for the many fine first tuesday articles. You folks are extraordinary. I’m no longer a CA broker, no longer even living in CA, but I read you religiously and do share, with credit.
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Good Article. Don’t agree with 25-33% of it due to liberal views.
Dear writer, when you get rich, like $1m to $100m net equity, your views will turn conservative. Aka self preservation aka balance sheet preservation. After $100m, you turn really “radical conservative”….
You don’t hold back on facts(statements), even if they hurt feelings, kinda like the truth statement by Romney! Why? Well if you like as a conservative, you get sued in court as a business man. If you lie as liberal, your not subject to “liability lawsuits” in civil or criminal courts. In the Politics industry, lies don’t equal to lawsuits!
47% of America are “moochers” that only want and don’t want to work 4 it. Sad, but that’s what USA is headed to: 50%+ moochers. When USA picks liars with no $$$ experience vs. HONEST GENIUSES IN FINANCE & BUSINESS…. AKA REJECTING ROMNEY & MEG WHITMAN… They want to LOOSE and MOOCH 4 THE REST OF THEIR LIFE. I blame the Liberal Loosers in Schools, colleges & universities, aka teachers that are business rejects in society. If it was my way, from age 10 to 20, all kids will be learning from CNBC & BLOOMBERG & MULTI-MILLIONAIRES!!!! IF YOUR NOT RICH, YOU DON’T GET TO TOUCH OUR KIDS MINDS. Look at the Loosers produced by the Looser teachers! 90%! If the Winners aka RICH taught our kids, they would be 90% winners vs. Loosers!
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