[quote author="financeguy" date=1253436007]There's been a lot of analysis done on this blog showing that prices have to fall in Irvine, in order to justify income levels. I was wondering if the same can be said about Corona Del Mar though. I really like the area, especially the village, but it's out of my reach right now. Given that the area is already built to capacity and the demand of being close to the beach, do you guys really see prices falling there too?</blockquote>
Here's my rebuttal... I might like a certain area, but at some point the 'gap' between two areas makes me choose the lessor area because of cost.
Example... say I like Corona Del Mar. I also like Shady Canyon, but not as much. Prices are similar... therefore my preference is CDM. Prices in Shady drop 30%. Now I have to ask myself, do I like CDM 30% more than Shady Canyon? Now, maybe not all people will think this way, you'll have people who "must" move to CDM. But others will look elsewhere.
Now, the CDM people are probably typically in pretty strong financial standing, and can hold out in most cases... so their prices won't drop as much. This is why in some areas a single or very few number of foreclosures can drop prices dramatically... all organic seller might "wait and hold"... but a bank will sell at free market, they won't want to sit on a home for 2-3 years and wait. This will cause immediate downward pressure.
Delroy
