From last Friday's "Real Estate Chat" with Maryann Haggerty, the Washington Post's Real Estate Editor.
Arlington, Va.: I know you like to say that you don't have a crystal ball, and I respect that, b/c none of us do. There has been a lot in the news this week about the mortgage mess and how prices are going to drop, etc. I know that prices have dropped before (in the mid 90s), but have prices ever dropped 30-40 percent in history? A lot of prognosticators are saying that when all is said and done, prices will have dropped 30-40 percent from the peak 2005 prices. Is this in any way realistic do you think?
For some background, we were ready in 2004 to buy a house, but we got out bid on every house we put an offer on (one in 2004 and two in 2006). We are now very glad that we didn't buy, and as far as I'm concerned, we can wait some more (and save more for a down payment while we're waiting) but I just don't know if the 30-40 percent drops are possible.
Maryann Haggerty: Maybe during the Great Depression. But no study either one of the two of us has ever seen has found a prolonged drop that steep, even in California in the early '90s...
Now, an individual house, that's another story. If you overpaid for it, it could very well drop a lot.
4 comments:
Ms. Haggerty needs to research (and learn!!) about the "Oil Patch" Real Estate crash during the late 80's ( in Texas, LA, Miss) when complete neighborhoods went repo & one could pick up houses at 1/2 their original sale price! Ask anyone in the South during those years, if they are old enough to remember - THIS CAN HAPPEN ANYWHERE!!!
Spunky,
True. In her chats, Ms. Haggerty often displays the same ignorance of bubble psychology as those who thought the market has never gone down and they would be priced out of the market forever if they didn't buy during the bubble.
She then often goes on about how 'rich' households in the DC region are, totally ignoring the fact that such 'rich' median household income levels did not suddenly rise between 2003 and 2006 (nor did the interest rates fall by a lot during that period) to justify that huge rise in house prices 2003--2006.
I often wonder how such clueless people can become editors and reporters of leading newspapers.
In response to another question from an Arlignton man, both she and her new sidekick pooh-poohed the possibility of a 40--50% fall in prices in Arlington, with the latter saying he would need a time machine for that. However, if a 40--50% decline will only take the prices to 2002/2003 levels, then it is entirely possible, although it might take 3 or more years to see that.
dfsdsdsd
Yes, bubble markets do exist, but in response to Spunky's "THIS CAN HAPPEN ANYWHERE!!!" comment, I would like to point out that "It doesn't happen everywhere."
When a man asked, “Do you think it’ll ever stop raining?” Twain nods and says, “It always does.”
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