Call the bottom

awgee_IHB

awgee_IHB

New member
Ok, here is your chance. Not like you couldn't have done this, (and you have), in any other thread. But, I would like your help for an experiment. There is no right or wrong answer; just your speculation is good enough.<p>


When will the bottom be? Month and year? And what percentage from the top?<p>


Thanks,


Awgee<p>


Oh, and I will go first if it helps to make you feel any more reasonable. And this is my serious answer.


December of 2012 and 70% from the top in adjusted for inflation dollars. Yeah, call me what you will; I'm holdin' to it.
 
<p>March 2012 and 62% from the $615K median home price of 2006 in inflation adjusted dollars.</p>

<p>I guess you can call me the same as awgee because we have similar predictions. And I'm holding to it.</p>
 
<p>I don't think it`s impossible to see a big drop, but what would be the economic impact of such a huge downswing? Not sure what % of GDP the housing market and everything that goes with it represent, but this would cause a really big recession. At some point something will happen to prevent such a big drop...hopefully I'm wrong since I'm on the sidelines.</p>

<p>My guess would be July 2010, 40%.</p>

<p>By the way, what would be the % drop right now? </p>
 
That "adjusted for inflation" qualifier leads quite a bit of wiggle room. With Ben firing up the helicopters, a 70% drop adjusted for inflation in 2012 could actually lead to a higher price than today!
 
You know my answers:





<strong><a title="Permanent Link to Predictions for the Irvine Housing Market" rel="bookmark" href="http://www.irvinehousingblog.com/2007/03/11/predictions-for-irvine-housing-market/" linkindex="22" set="yes">Predictions for the Irvine Housing Market</a>





<img src="http://www.irvinehousingblog.com/wp-content/uploads/2007/03/ihb-post-irvine-market-decline-chart.jpg" alt="" />





And:





</strong> <a title="Permanent Link to How Bad Could Bad Get?" rel="bookmark" href="http://www.irvinehousingblog.com/2007/04/02/how-bad-could-bad-get/" linkindex="19" set="yes">How Bad Could Bad Get?</a>





<img src="http://www.irvinehousingblog.com/wp-content/uploads/2007/03/ihb-post-market-decline-extreme.jpg" alt="" />
 
When the rents pencil and when employment growth is positive is when I will buy. December 2012 50% fall adjusted for inflation in homes. I'll stick with my 90-97% fall in land prices prediction....
 
Winex - Call it however you want. I qualified with "adjusted for inflation", but you call it as you see it. However.
 
<p>I say late 2008 to be at the bottom. There will be another 50 basis pt drop before Dec. And as some have stressed that lower rates will only bring down the value of the dollars. If that's the case. The purchasing power of the dollars will deminish. This will cause prices to rise. </p>

<p>I know many will scoff by saying, "There's no way, I would buy that house for that price." But please keep in mind. It's not the house that cost more. It's the value of the dollar that has declined.</p>

<p>Disclaimer: As awgee have stated. There's not right or wrong answer. Please do not respond. Just sit back and ponder. Thanks.</p>
 
<p>All I did was calculate what the 2000 median price was adjusted for inflation and factored in inflation for the future. That gets you a price of $445k which is 28% off the 2006 median price of $615k in nominal terms and 62% off in real terms. </p>

<p>Taking the two lows of IR's charts the average is $391k when adjusted for inflation. This is more extreme than me but not impossible due to a correction so bad that it could overshoot mine. I would say this is highly possible if job growth gets weaker and foreclosures do not flatten out. There are several factors which could make my prediction too bearish and factors that could make IR's seem to bullish. </p>

<p>Now for fun I checked the CAR data for the 1984 (equivalent to 2000) price of $134k and the 1996 (the bottom) price of $211k. Ironically it was pretty close that adjusted for inflation the price should be $204k. A big 3.4% over inflation. Now I could be a real stickler and use the LA/OC inflation rate or even CPI-U and it probably wouldn't even break even.</p>

<p>All I know is it always returns to fundamentals and we are just beginning that voyage. What sucks is I have to realize at some point between now and 2012 I will have lost money on my home when adjusted for inflation. Oh well I just hope I don't have to sell in that time period. </p>
 
<p>$700k home will be $418k in the year 2012, that's 4 yrs away. Don't get me wrong, I would love that to be the case. That way I can afford that bigger home.</p>

<p>And this is based on historical and fundamentals?</p>
 
<p><em>"And this is based on historical and fundamentals?"</em></p>

<p>Yes actually it is. I repeat but here is history:</p>

<p><em>"Now for fun I checked the CAR data for the 1984 (equivalent to 2000) price of $134k and the 1996 (the bottom) price of $211k. Ironically it was pretty close that adjusted for inflation the price should be $204k. A big 3.4% over inflation. Now I could be a real stickler and use the LA/OC inflation rate or even CPI-U and it probably wouldn't even break even."</em></p>
 
What I see now in new homes ads. For example, a new 1 bedroom cost $300k. Are we saying it will cost only $100k by 2012? Haven't the builders factored in all the cost into building said unit? Hence, they arrived at the price of $300k? Especially, in this type of market.
 
<p>No you need to ADJUST for inflation. And builders are losing money hand over fist in case you haven't been catching their numbers lately. </p>

<p>Sorry not trying be rude. I actually like you now reason, with your is that ladera1 comment. </p>
 
<p>To emphasize costs. Such things as land acquisition, materials, labor, margin for profit. Are we saying that it didn't cost the builders $300k to build said unit? Granted there's a margin for profit.</p>
 
Hey, our first encounter wasn't so much we disagreed. Looking back on it. I was concentrating on buyers prior to 2004 and how they did ok. You were discussing on buyers after 2004 and how they will be screwed. We were actually discussing different years.
 
<p>But I have to admit. It's so darn hard to predict how far this decline will go on.</p>

<p>Now, we have this threat of a recession, inflation, employment #s, decline of the dollar, etc. It's like a no win situation now. I mean it's great that house prices are falling. I just didn't expect all the other cr*ps mentioned.</p>
 
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