For the Past 60 Years, economists, wall street analysts, and other supposed financial experts have predicted the end of real estate appreciation. Take a quick trip through their
far-off-the-mark forecasts from years gone by:
Â©If you have bought your house since the War...You have made your deal at the top of the market...The days when you couldn't lose on a house purchase are no longer with us." (House Beautiful, November 1948)
Â© "Be suspicious of the 'common wisdom' that tells you 'Buy now'...Because continuing inflation will force home prices and rents higher and higher." (NEA Journal, December 1970)
Â© "In California...For example, it is not unusual to find families of average means buying $100,000 houses...I'm confident prices have passed their peak." (John Wesley English & Gray Emerson Cardiff, The Coming Real Estate '' Crash. 1980)
Â© 'if you're looking to buy, be careful. Rising home values are not a sure thing anymore." (Miami Herald, October 25, 1985)
Â© "We're starting to go back to the time when you bought a home not for its potential money-making abilities, but rather as a nesting spot." (Los Angeles Times, January 31, 1993)
Â© "Financial planners agree that houses will continue to be a poor investment." (Kiplinger s Personal Financial Magazine, November 1993)
Â©"The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline." (Time, December 1, 1947)
Â© "Houses cost too much for the mass market. Today's average price is around $8,000â€”out of reach for two-thirds of all buyers." (Science Digest, April 1948)
Â© "The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs $28,000." (Business Week, September 4, 1969)
Â© "The era of easy profits in real estate may be drawing to a close." (Money, January 1981)
Â© "Most economists agree... [a home] will become little more than a roof and a tax deduction, certainly not the lucrative investment it was through much of the 1980â€™s.â€ (Money, April 1986)
Â© The baby boomers are all housed now. They are being followed by the baby bust. By 2005, real housing prices will sit 40 percent below where they are today." (Harvard economist Gregory Mankiw, "The Baby Boom, the Baby Bust, and the Coming Collapse of Housing Prices." Journal of Regional Economics, Fall 1989)
"I just think he's too negative all the time," said Paul Ward, a broker associate at Keller Williams Realty in Danville, who most recently took offense when Thornberg called the real estate market "abysmal." "If anyone listened to him (Thornberg) in 2003, they would have lost out on a lot of money," Ward said.
"And Thornberg takes that role seriously, courting the media until he has become a blue-chip expert on real estate economics. His media presence is huge. In the past month, the Southern California-based Thornberg has appeared in almost every news outlet in the Bay Area."
Thornberg is the Media Darling and owns his own Company Beacon Economics. It is easier to buy into the Most Negative speaker when your a media outlet, it is the fastest route to Sensationalize and Sell papers. Do you think the papers have an unbiased opinion or how about someone that gets paid to be a keynote speaker everywhere he goes, example. " And unlike many economists who simply do a state of the economy, his company, Beacon Economics, goes out on a limb. "People who don't want to hear about it don't ask us to talk about it," he said." Sounds like good sound unbiased opinion to me.
""I read what he has to say, but what do they tell you in college? Don't just look at one source," said Colleen Badagliacco, president of the California Association of Realtors."
I agree with the last quote. It is one of many voices that we need to find the truth.
And yes give your self a pat on the back, you are the reason why the media continues to print and report articles like this. If it wasnt for you, there would be no need for the negative media #'s.
I believe that the public needs to be aware of whats going in the market, and the media could be a great outlet. But it is easier to report negative than positive information. And Negative sensationalism is what sells papers, and magazines.
It is really hard to get an unbiased article, i have yet to see an honest evalutaion of the current market. i would really like to see what is really going on. Media is the negative Brokers in your eyes are the postive, but there is an in between that needs to be brought about. Only during honest evalutions can we honestly reflect upon a 5 year plan. I dont think furtune, came close and maybe some others that we look to have not also.
Time will tell And i can Gurantee you my house in Danville will never be valued 38% of what it is worth currently. I stand behind that.
I also love the term forecasting......which equates to "predicting." WHo has the best crystal ball?
It all depends on City and neighborhod. Danville and San Ramon are very desirable communities and I don't thing you are going to see the swings here that these folks are predicting.
Seek out your LOCAL Realtor, get LOCAL data and make an offer based on this LOCAL information. The "Cheerleaders" we now have in our industry are doing just as much damage as those predicting Armageddon!! As usual we have middle, realistic ground which needs to be sought.
Perhaps many wealthy people DO hem and haw about spending $20. That's how they got to be wealthy - "nickle and diming" and being frugal.
Income is never "disposable" - treating it as such is why people end up with more debt than they do assets. You show me someone throwing their money around willy-nilly, always seeming to have enough to pay for everyone else's drinks, and I'll show you someone eyebrow deep in debt.
Don't be fooled. The wealthiest people I know can also be the cheapest. (Or should I say " most frugal"?) :-)
Now wow to think that you actually think that east bay in this articles light can even apply to the areas you mentioned is, Well ill be polite wishful thinking. Im as eager to find out whats next as anyone else, but to look at this article and give it merit as to your question, i can clearly say i cant.
They are including oakland, and other horrible areas in here. If you are to use this theory that they are suggesting you would need to actually have the price/rent ratios of the actual city, yet alone neighborhood to get an accurate reading. To bundle Oakland's numbers with Danville or say Alamo is clearly irrational. Tell me one are of statistic were you can bundle in those 2 cities. Can you say crime in oakland is a reflection on Alamo. Can you base school scores on a generalization like this. No you cant. Alamo and Oakland school scores are extremely different. But yet you sit there and hope that someone will be persuaded to take a 38% reduction on there house because of fortune magazine. Luckily there are educated people in this world, and we should be glad they are not as naive.
Not to mention you forgot to minus the avg. rise of 12% and that would give you 26%. Thats there east bay #'s. I think they might work in Oakland but there sure not working here. Good luck with that though.
I work in San Francisco and commute in every day. Generally, it is not that bad unless the bridge is closed. I have asked my children repeatedly if they would like to move to San Francisco. Their unanimous answer has always been NO. Alamo is home, and Alamo is family.
Walnut Creek has decent amenities, but is sounds like you aren't really "feeling" the community. There are some nice neighborhoods with high end homes, but overall, it sounds like you have something different in mind for a place to plant roots.
Tiburon is pretty too, but probably a hell of a commute for your husband also. Good luck in whatever you decide to do.
The homes in Alamo are very nice, but the town pretty much only has a Safeway...which is the same issue with Orinda. Living there would require a lot of driving to do anything since the town has very little in the way of amenities, and nothing is walkable. Plus the traffic is horrendous to get anywhere outside the area via 680 and 24.
MV and PA seem to have everything we are looking for...good schools, restaurants,shopping, proximity to art and culture, sophisticated and educated people, family oriented, walkable downtown areas and good weather. These areas also feel more familiar to me as a transplant. Unfotunately there isnt anywhere in the contra costa area like MV and PA.
We are taking our time to make the right decision, but at this point it comes down to lifestyle vs. commute.
There are so many factors involved in such a personal and important decision. Each buyer will make their decision based on their own priorites, but when it's all said and done what really matters at the end of the day is that each individual feels that they have made the right decision, at the right time - for them - based on their own personal needs.
The home we purchased needed light cosmetic work but was structurally very sound and had a beautifully updated kitchen and baths. We wanted *some* work to do ourselves, being DIY enthusiasts with our own unique design style. We have loved working on our home as a couple, and it's really been rewarding to see the home become "us" - plus in a declining market, we've managed to add some value back to the home by doing some small upgrades and improvements. We also got a real good deal on the home due to some unique circumstances with the seller. (Long story, but in the end - everybody won! ) Interestingly, the sellers were there for the initial viewing AND the inspection - it was a very atypical situation - but it went seamlessly.
I'm happy with my choice that I made to buy my home last summer, (despite all the uncertainty of today's market) and I hope when the time eventually comes for you to "take the leap" you find a great home in a community you love as well, and that you end up feeling really good about the entire purchase, and the end result. I also hope you end up liking it here. I know it's not what you're used to, but the community does have some wonderful features.
Have you narrowed down to a certain town, or are there a few options you're looking at?
It is also a buyers market right now, so when homeowners read how picky buyers actually can be about the condition of a home, what the street looks like, how the neighbors maintain their homes etc they may take it personally. In the Lamorinda area in particular, the reality today is that most buyers are still not willing to pay the current asking prices for area homes, espcially those in distress, needing extensive cosmetic repairs etc. I personally know 3 or 4 buyers in the area who feel exactly the way I do about the area home quality vs. prices.
If you bought a place in the past 5 years, along the 24/680 corridor, this may be what you ended up with. Or you may have paid less, but think this type of home is worth X dollars because you have grown to love the place, and have memories there. This is why agents generally keep the sellers away when buyers are looking at the place...so they dont hear the comments. It is normal for the seller to be emotionally attached to their home and neighborhood.
On message boards, everything is out in the open, and it is hard for people to not take things personally, but when it turns ugly, and off topic, that isnt good or helpul for anyone so closing that post was the best thing to do to keep things civilized.
The fortune magazine article mentioned above is now a reality in the more desirable parts of the east bay, and that has a lot of homeowners worried about their biggest asset losing money every month, and buyers skeptical about not seeing a bottom any time soon.
I wanted to respond to your thanks for the listings - you're welcome. Not sure if they suit your needs, but it looks like there are few choices out there in your target areas with the room you and your family are seeking. I think we looked at 50+ houses before we picked one. :-)
Have fun with your friends, and hopefully the home search will go smoothly for you. If you and your visitors want to try a nice restaurant, Postino in Lafayette is great. (Not sure if you've been there yet, I just went for the first time last week.) The wine list is excellent, and the food is fresh and flavorful. I can't say enough about the ambience and the interior - it looks straight out of the Italian countryside.
It's an unfortunate situation you are describing, and while $150,000 per year income could be considered quite wealthy in some parts of the country, here, unfortunately, it doesn't go far. Another factor is what we have been discussing all along - home prices/cost of living shot up here, disproportionately to income and wages. People who were doing fine a few years ago are struggling now.
It's never a good idea to overextend one's self, and it can happen in any income bracket. "Wealth" is measured less by income alone, and more by debt to income ratio, money saved vs. money spent, etc. If you are making 2 million dollars a year, but spending 3 million, you're not wealthy, you're screwed.
(If, in fact one is measuring wealth, simply by dollars and cents alone, vs. all the other factors that make a person "well off" like emotional and personal stability and fulfillment, neither of which money can buy.)
I think "rich" people worry about money all the time, though - how to make it, how to save it, how to avoid spending, or losing it, how to hoard every penny to the point of obsession, which likely makes them worry far more than what's healthy.
We make enough to live comfortably in my household, but we're not Bill gates and Oprah. However, we purchased our home with zero debt, not so much as a $5 credit card balance. Our mortgage is high compared to the rest of the country, and even a good portion of Contra Costa county, but it's our only expense outside of cost of living, and therefore, we're doing fine. As far as having money to "spend" we do, but don't feel that we need to spend a lot to feel like we "have a life." In my experiences, the more you want, (or feel you need) in a material sense, the less happy you actually are. There could be a lot more going on in the lives of the folks you are speaking about besides just income that is causing them stress.
I'm just speaking from a practical sense. Money can, and does, buy heat, food, shelter, etc, thus fulfilling the very lowest, basest level of the hierarchy of human needs, but that's really about it.
Look at 106 Sonoma. Sellers paid $1.6M in 2006 selling for $1.2 today.
3204 STONE VALLEY is going to drop to $1M... 6 months on the market
18 Ardendale Ct (4800 square feet!) down to $1.3M
1597 Via Romero is down to $1.25M
South Jackson had 3-5 homes for sale and is now a
A price chart for the area shows a clear break with normal price to income ratios and price to rent ratios in about 2000. It is reasonable to assume that without exotic mortgages which reduce the upfront cash required and monthly payments in years 1 through 5 that housing will return to its normal ratios of income to price. This would suggest a significant decrease from current prices. If prices return to 2000 levels it would represent a 54 percent drop from current level.
I cannot predict where house prices will end up after the current crisis "washes out". But a look at fundamental economic factors suggest that housing in Danville and Alamo has a long way to drop.
As housing prices falls the number of homeowners â€œunderwaterâ€ increases leading to increases in the number of homes in foreclosure. The increasing supply of homes coupled with the reductions in actionable demand attributed to the difficulty in attaining a mortgage for anyone without sterling credit and a large down payment is almost certain to decrease prices even further.
I think There will be easily a 10% correction and maybe more on some appraised values, but there will be also some areas seeing appreciation. So to each there own. And i Hope you and Susan one day find the house and price that makes you happy.
My favorite part of this article is where it says an upscale 1.5MM home in WALNUT CREEK will be worth $1,078,000 in 5 years. This is one of the areas I am looking to buy a home right now. Oh...my bank account will be so much happier with this great news. I am SO GLAD I didnt buy when we first moved up here, and chose to rent and watch what happens. Everything I predicted is coming true.
With alot of the market being hampered by subprime borrowers, and general adjustable loans. This area is one of the areas were i dont see this having as big of an effect. Protected by some of the best schools and environments to raise a family this area will always find a way to weather any bad market. Having lived in the area, and experienced the overall community, i dont see people in the area running for the hills and selling at discounts of 38% or even 10% for that matter. Not to say that you cant find some bargains or a couple of short sales and foreclosures her and there. It is just not going to be as big as other investment type communities and subprime markets.
In my opinion it is a great time to buy in the area, as long as you are going to stay in the property long enough to weather some small adjustments. The area will more than make up for it, it is beautiful place to live especially for a family.