Oh, silly RealtorsÂ®.
Let me respond in turn. And please keep the thumbs down coming RealtorsÂ®. Iâ€™ve obviously hit a nerve with all these facts, figures and calculations. Pesky numbers!
Elizabeth said, â€œI believe the question was should the buyer purchase now, in this market, in this climate in Sacramento, given the 11% increase in closed sales in May over April and the 48% increase in closed sales for May over the same time last year, coupled with rising interest rates. I don't believe the buyer was referring to Connecticut's market nor whether interest rates as a whole are more important than pricing.â€
Uh, no. That wasnâ€™t the question. The question was, â€œIs it better to buy while interest rates are low or wait for home prices to drop more?â€ Direct quote. Itâ€™s the question thatâ€™s right at the top of this page and itâ€™s the question that I answered. As for your point about me being in Connecticut; I didnâ€™t know that you need to live in California to understand the basics of finance and economics. My bad.
Furthermore, Elizabeth, you donâ€™t have to live in California to know that the median price of a home in Sacramento was down 35% during the three months ended May 31 compared to the same period last year, according to Trulia.com.
Itâ€™s hardly a â€œgreat time to buyâ€ as prices continue to accelerate in their downward trend. Why buy today when I can buy for less tomorrow; unless wiping out the hard earned equity of your clients is your goal. Your â€œbuy now before youâ€™re priced out foreverâ€ mantra scared people on the way up, but it makes you look silly on the way down.
The gain (expected value) that a potential buyer stands to benefit from a 95% certainly of continued price depreciation is much greater than the 40-60 percent chance of rates increasing in the near term. Iâ€™d wager that itâ€™s greater even with a 100% chance of rates increasing in the near term given the velocity equity evaporation in California.
I do give you props for going counter to your RealtorÂ® friends in admitting that price is more important than rates.
Bill said, â€œâ€¦because we are near the bottom.â€
Uh, yeah. You guys calling bottoms every month is the height of comedy. The downturn continues to -accelerate- and youâ€™re calling a bottom? We are so far from the bottom that RealtorsÂ® will pine longingly for the terrible market conditions we have today and count themselves lucky to have experienced it so good.
Weâ€™re in the â€œrearranging the deck chairs on the Titanicâ€ phase of this downturn. You can still talk-up real estate and make it look pretty. Some people may even still believe that real estate never goes down, just as they thought that the â€œTitanic is unsinkable.â€ Maybe this time it is different. Is it getting cold out here?
Jim said, â€œInflation is likely to begin offsetting the decline in areas where property values declined, and I expect prices to at least stabilize if they don't start going up in those areas by the end of the year.â€
Jim â€“ unless you live in the Weimar Republic, circa 1923, there is no way inflation will outpace the decline in real estate values, especially those in California.