Question Details

Infinity Rea…,  in Saratoga, CA

Can you compare todays market to any other in the past?

Asked by Infinity Realty Network, Saratoga, CA Mon Oct 29, 2007

I hear this all the time from people. Is there any other Market in history that can compare to todays current market where sales are down, rates are good. And economy is growing.

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Our past run-up was considered the "great connundrum" by the "great man" himself, Mr. Greenspan. If I go back to my start in 1978 we had rampant runaway inflation at work with the market. As soon as I got in the interest rates broke 10%!!! We then promptly went to 21.5% for the highest. Of course, inflation was running with our prices also but the interest rates kept many folks OUT of the market. I did a buydown once on an interest rate of 8 points!! Cost the Seller 15% in total fees to sell the house!
I pulled up my old clippings I keep for my radio show and saw a slowing of the market back in 1998. We had gone up some 20% in 4 years and felt pretty hot! Then we all know what happened next and this WITH the DOT.BOMB!! In the SF bay area we lost 350,000 high tech jobs at the BEGINNING of the real estate madness! We still led the greatest state of California OUT of the recession and to the heights of which we now recede. The high water mark is on some new homes in the Phoenix market!!
I count my blessings that we have low interest rates today as the crater which was the late August, early September "Credit Crisis" lingers here in Sonoma County. Are sales are headed for two consectutive months of just barely over 200 total units sold in the County. This is 50% off from year to date numbers. Also, the median has fallen 10%. We had been seeing not a big fall in the median but huge falls in sales.
It's not so much as creating NEW sales but getting a bigger market share of the existing paltry numbers. Imagine rates at 7.5 or 9.5% AND the credit crunch! I shudder to think of it! But $750,000 and above is just doing swimmingly thank you!! So, let's just all work the upper end! One needs to adapt, change and shift our focus--but remain FOCUSED!
0 votes Thank Flag Link Tue Oct 30, 2007
Thanks for the Reply Michael, i just don't see any correlation in this current and upcoming market to any other that we have ever experienced. Even top economist are scratching there head, on this topic. As Greenspan opened the flood gates he has left a huge problem to solve for a relatively new chairman.

I dont even know if they can pull the reins on what they have started. When wall street drops 350 points because they see no more interest cuts in site, you know something is backwards. I feel the media will ride this wave of negativity till some other notable news forms. The only segment i see actually hurting compared to others is the jumbo mortgage market. Everyone else is doing fine. Rates are great, and sellers are selling at a discount due to the media scaring them that it might drop more.

With th banks stepping up and helping to refinance some of the billions of dollars of adjustables, i think they might soften the blow even more. The inventory and foreclosures that were expected because of adjustable loans is softening which i see as a positive.
0 votes Thank Flag Link Sat Nov 3, 2007
Real Estate has always ebbed and flowed. Most people don't realize that home prices went up during the great depression. But dropped dramatically during WWII and then exploded after the war (the Baby Boom).
0 votes Thank Flag Link Mon Oct 29, 2007
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