San Diego foreclosures drive down prices
Heres a link to a link of a story - Calculated Risk has a post about an article in the Wall St. Journal about foreclosures in San Diego.
A surge of foreclosures over the past year or so has left lenders struggling to sell a growing backlog of homes.
…
At the San Diego sale, houses and condos typically sold for about 30% below the previous sale or appraisal prices. In a few cases, the discounts were around 50%.… A glut of condominiums also is weighing on the market. Peter Dennehy, a senior vice president at Sullivan Group Real Estate Advisors, a research firm here, estimates that at the current sales rate there are enough condos on the market to last about 29 months.
I’m posting the link to Calculated Risk instead of the WSJ because there are some reader comments attached to the story about BC and Alberta markets that some of you may find interesting.
BC’s #1 industry is forestry which is in serious trouble. Population growth is the slowest in decades. The economy is being kept growing by real estate investment. “Everyone wants to live here” (note contradiction) and “This time it’s different” (2010 Winter Olympics) are religious creeds in BC. I don’t think I have to explain what that portends for the future.
(No Ratings Yet)
Loading ...
May 14th, 2007 at 10:37 am
Unfortunately, Chipman seems to be up to his old tricks by monitoring and disallowing unfavourable comments.
May 14th, 2007 at 12:55 pm
Cycle may be different, but we never learn.
Ahkenaten
May 14th, 2007 at 9:00 pm
Note that the driving industry of southern California, IT and pharmaceutical research, is in recovery/expansion mode. The economic engine of BC? Well, if you think the Olympics is a real industry, then fine. Other wise, better pray for a miracle in forestry sector. One interesting observation is, despite the forestry sector and its related industries in serious trouble, the RE market in Kamloops is also having a mad party. Kamloops is without a doubt a forestry town, with surrounding commercial forestries and a big pulp mill. Yeah right, everybody wants to live in Kamloops, and population will double very soon due to the new Thomson River University. That’s what I learned from house flippers in Kamloops. Let’s see how this party ends.
May 15th, 2007 at 12:34 am
There were very few foreclosures while prices were still rising for obvious reasons - buyers with cash flow problems could refinance or just sell and get out with money in pocket.
Both foreclosures and falling prices are symptoms of the basic problem - lack of affordability.
May 15th, 2007 at 8:10 am
Yup. Foreclosures do nothing in terms of the imbalance between supply and demand. But they do act to clear the market when less motivated sellers are oblivious to this supply-demand imbalance. Without them, the situation would just take longer to unwind, and perhaps with smaller nominal price drops. Death by guillotine, or death by a thousand cuts?
Sort of OT: It amuses me how the spin doctors try to isolate causes.
Lereah talked about how the recovery was going great when out of the blue came the subprime situation, who could have predicted that. He insinuates that it was an unlucky random event, which of course is complete b*llshit. It was a direct result of the excesses he helped promote.
Now I can see the same thing for foreclosures. The recovery would be around the corner, but all these foreclosures bring down prices.
I also chuckle at the NAR assertions that negative media is bringing down prices.
When prices go up, it is the result of some natural law. When they go down, is due to unfortunate isolated events. Why was the potential subprime situation overlooked on the way up? Why was the impact of positive media coverage overlooked on the way up? If these guys were true forecasters they would warn about those things. But they are not forecasters, yet pass themselves off as such, with fancy reports. I hope the NAR gets so discredited that they will never again be widely quoted as an authority on real estate trends.
May 15th, 2007 at 9:23 am
Last I checked, firewood sold for substantially less than cut lumber.
May 16th, 2007 at 2:19 pm