The P-I just posted a pretty good rundown of the latest stats, cheerily buoyant if you really believe the realtor “now is the time to buy!” malarkey that the story’s author does little to countermand, grimmer if you check out the better-informed Soundoff section. The reality, as we’ve noted before, is that our trailing-edge market is just catching up with other meltdowns, notably the Bay Area. Subprime numbers are not as relevant here because a lot of the boom was fueled by actual wealth. Example: A townhouse on the market for nearly three months here is owned by a guy living in Arizona who bought it two years ago with no intention of ever living in it. Purchase price then: $420,000. Selling price now: $590,000.
Sure, he’s dreaming. He may unload the thing, but if I was negotiating, my pitch would be, Hey, I can only go $450k. I know that’s low, but I’m taking it off your hands and you’re gonna take a bath if you don’t flip it now. Etc etc. Would such a sale translate into housing values going down? Not really. But from a perception standpoint, oh yeah. And that cycle is just as potent downward as the boom cycle was upward.
Fasten your safety belts, we’re in for a ride. Still to be addressed: Now that the crash has begun, why is so much building still going on???? Might be a story there…