Monday, August 08, 2005

Are We In Stage 1 or 2?

The Boston housing bubble appears to be in stage 1 (denial) or 2 (anger) of the Kubler-Ross sequence.
"Sellers, many of whom are trying to cash out near the height of the market, are growing increasingly frustrated as their houses sit on the market for weeks and months."

""The 'huge amount of inventory' is bringing prices down in Milton and Quincy, said Betsy Trethewey of Re/Max Landmark in Milton. Sellers are not acknowledging the changing dynamic, though, she said."

""Sellers are frustrated, and some are angry, she said. 'They've been very spoiled for the past few years. They're not accepting the truth of what is actually happening,' Trethewey said. Sellers traditionally are slower to realize when the market is changing, usually because their information is more dated than buyers'.""
Meanwhile, San Diego, CA is just entering stage 1.
" Nobody would pay San Diego prices without believing that prices will continue to rise."

"Bubbles end when people stop believing that big capital gains are a sure thing. That's what happened in San Diego at the end of its last housing bubble: After a rapid rise, house prices peaked in 1990. Soon there was a glut of houses on the market, and prices began falling. By 1996, they had declined about 25 percent after adjusting for inflation."

"And that's what's happening in San Diego right now, after a rise in house prices that dwarfs the boom of the 1980s. The number of single-family houses and condos on the market has doubled over the past year. "Homes that a year or two ago sold virtually overnight - in many cases triggering bidding wars - are on the market for weeks," reports The Los Angeles Times. The same thing is happening in other formerly hot markets."

"Now we're starting to hear a hissing sound, as the air begins to leak out of the bubble. And everyone - not just those who own Zoned Zone real estate - should be worried."
And from this article:

"Flores, a self-described real estate "flipper," [in San Diego] is trying to sell two condos. But neither has gotten an offer after being on the market for more than a month, even though he's willing to break even on one and reduce the price on the other."

""It's getting trickier now," said Flores, 30, who became a full-time property investor three years ago after a short career as a senior financial analyst for a movie studio. "Everyone thinks this has peaked.""

"Once Southern California's hottest real estate market, San Diego County is feeling a real estate slowdown. It's a trend also starting to be seen in other regions..."

"San Diego has become a focal point of that discussion. People who believe the market is about to implode say that San Diego's cooling could be among the first signs of a pronounced downturn or even a possible crash in California."

"Amid concerns that prices might be peaking, more homeowners are selling, doubling the number of single-family houses and condos on the market from a year ago. Yet fewer are finding takers. Homes that a year or two ago sold virtually overnight, in many cases triggering bidding wars, are languishing for weeks."

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