Another 7% Drop in Home Prices

Real Estate Agent with Seven Gables Real Estate BRE 01727426

According to DS News reporting on the report issued by Barclays Capital last week, home prices are expected to drop another 6 - 7 percent over the coming winter months. Following the probable “triple-dip” in the first quarter of next year, Barclays says home prices will “rise very gradually.”

In Southern California, we have returned to an equilibrium between the after tax cost of home ownership and the cost of renting. However, with over 4 million homes nationwide either in foreclosure or seriously delinquent, plus millions more simply upsidedown, additional price declines seem unavoidable as discounted REO and short sale inventory will continue to overwhelm the real estate market for at least another 18 - 24 months. As a seller on the fence, the time to sell is now.

As a buyer on the fence, the time to buy is within the next few years. Current interest rates in the low 4s combined with exceptional values, make the dream of homeownership a reality and currently financially sound decision compared with renting.  As always, it's important to purchase a home well within your range of affordability. Just because the bank says you qualify for a certain loan amount, does not mean it fits your personal budget and risk tolerance.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

License #01727426

Direct: 714 276-7006

Fax: 714 917-2293


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Donnie McKinney
Coldwell Banker Commercial Purchase Realty Group - Paducah, KY
Donnie McKinney CCIM, Coldwell Banker Commercial

I keep thinking the cycle will bottom out in about 18 months or so. Hopefully, it will be sooner.

Just out of curiosity, do you have any figures as to the rent vs own ratio in CA? I think 1.05 is about the historical norm, and during the height of the bubble it reached about 1.85. That's the way we can tell when the cycle has turned.

Oct 17, 2011 03:29 AM #1

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Mar 13, 2012 03:58 AM #2
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