The housing meltdown has affected across the US continent, like a strong wave. The nature of a wave is that it propagates through. It does not hit all the places at the same time with the same strength. It has delays, and it could hit minor obstacles and cause redirect or refraction. After the wash, perhaps it's clearer to see which areas are stronger to keep its shape and which areas become highly distressed, or say, back to their original values. Hence most people know, real estate is highly localized market. The average numbers reported nationwide, even per State, or per County, could only be served as rough references. They are related, and will affect local markets, yet the extent is dominated by local profile. It's not easy to guess how much, how fast the changes will be. That's why even experts can not predict the future.
What I observed in Silicon Valley, school districts, prime location and land are among top reasons to keep house values. Interestingly, whether the house is old-style-50-year-old or equipped-with-modern-facilities-3-year-new actually affects less. For example, newly built KB Homes around central San Jose, 2200 sq.ft., single family home, with all the modern touch, has dropped from $750k+ to $550k- (more than 25% down) in 2 years; far west San Jose (close to Santana Row), the area was hot during 2006, house prices have dropped about 15-20%, same as Santa Clara area, closer to Lawrence; while good areas in Sunnyvale dropped less than 10% so far.
I watched a TV show last weekend, talking about real estate white elephant around San Francisco Bay. The mansion overlooks the bay, with all the sculpture and luxurious decorations that you can imagine, the asking price has dropped from 65 to 44, Million. Some say when the wave finally hit the white elephant, the bottom is not far away. Most people are expecting the market to stabilize before end of 2009.
Should we call the areas that dropped more as 'distressed' areas, hence better investment opportunity, or they simply went up too much than they should have? The so called 'good areas' that dropped less than 10%, could it be that the wave simply has not hit them right on yet, or could it be that they would withstand the storm and prove to be more worthy? I guess before end of 2009, before market stabilizes, no one really knows the answers.
Wednesday, January 14, 2009
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2 comments:
Places like Cupertino and Palo Alto that have good school districts won't ever really go down. They might flatten out, but there are some people buying houses in this market. The speculators were the ones chased away.
There are buyers right now. Buyers looking for bargains... Cupertino and Palo Alto both have fallen too, don't trust the numbers on zillow. My friend in Palo Alto just had an appraiser coming in (for refinance), and appraised it only 1.1M, while on zillow, it showed 1.46M, see how harsh the reality is?
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