In lieu of the false primers that ignited the historical run up in home prices: low interest rates, ninja loans, flippers, pick your pay loans and greed, it is pretty gullible to think home prices have reached relalistic valuation corrections in light of historic annual rates of growth in relation to peoples income, most especially this soon after the market peaked and in light of so many vested interests doing everything possible to stifle market/economic forces and the downward correction in home values.

Fact is, the market has been so inflated and abused values might have a long, long way down to go.

One thing I am pretty confident of is we aren’t going to see the bottom for a couple of more years.

I think we will know we are at the bottom when this country returns to manufacturing things again.

jeezo, this chart doesn’t jibe with the real estate section of the palo alto daily news. shacks purchased in menlo park in july 2006 for seven figures are currently worth…seven figures. no doubt because tech is immune?

Maybe it is just that PA and Menlo are just stronger and faster Wiley Coyotes that will eventually look down.
We just sold in PA in Nov. I think we could have got maybe 200 to 300K more if we had sold in the spring. That’s the breaks. Even so, two days on market and full asking with no contingencies is not too bad.
We sold for reasons that no one on this blog would be interested in but that left us with less proceeds than required to downsize in the area.
We just made an offer on a house at 50% below its peak asking. Short sale. It will be interesting to see how the seller and bank respond.
We would prefer that WC look down sooner than later as we would really rather live near or around PA than where we made the offer.

If the graph was today’s price, it would be more significant, but given that it is November’s Data and we are less than a week from February, the value of the data is less.

Any real estate indexes aren’t perfectly as each house is obviously different so comparing sales prices isn’t very accurate. With the Case Shiller index as you say it’s based on repeat sales (of houses with no major discernable quality changes) within a particular city/region so it’s the best index I know about.

They start by getting an index for each city/region then they average them out to get the composite indexes we see in the graph above (not weighting them for the number of house sales in each region so not distorting them in the way cjcpa was asking about.) You’re probably talking about an random error of up to couple of percent in each cities index (greater errors where there are less sales e.g. in smaller cities with less active housing markets) however if these errors are random they should pretty well cancel out on the composite indexes.

I spent 5 years writing a thesis on speculative forces in residential housing markets. Needless to say there are a lot of misconceptions put out by the mainstream media. I’ll blog on it today at http://reflexivityfinance.blogspot.com/ .

If you like the house you are now renting from deadbeat homeowners, why not see if you can buy your current home from the bank?

the price drops have ocurred for the most part in previously heated housing markets that saw several years of double digit appreciation fueled by rampant specualtion. Does that sound like Montgomery County PA? I do not know your market so only you can answer that question. If appreciation for your area was low to moderate and home prices aren’t too different from several years ago than you may be ok.

Consider negotiating a lease-to-buy option to give you extended time to monitor the market, locking in a price on a home you choose now (or during Summer ’09) yet having an out if prices really do nosedive in your area over the next year.