We asked the obvious two months ago when Economy.com predicted 3.6% home price gains for San Francisco, San Mateo, and Marin over the next two years despite analysis that suggested “prices in the three counties were…7.5 percent higher than Economy.com predicted they should be based on historical comparisons.”
This week, Fortune “asked Moody’s Economy.com and Fiserv Lending Solutions to crunch the numbers for the top 100 markets in the United States.” Their forecast for home prices in San Francisco-San Mateo? Down 0.2% in 2007 and up 1% in 2008. That’s still no “crash,” but that is an effective two year swing of -6.5% as compared to the Economy.com prediction of just two months ago. We’re losing faith (and not necessarily in the market).
∙ Economy.com Weighs In On San Francisco [SocketSite]
∙ Hot spots, cold spots: Chill on the coast [CNNMoney]
This is the projected median, not the projected same house price. Medians measure what people are spending. The average spending won’t drop: but what you get for spending the same money as the year before will be impressive.
They didn’t predict prices, they predicted spending. With fewer buyers and many more sellers, that can only mean that the buyers will get a lot more for their money, even though they are spending the same amount as last year (or a little less adjusted for inflation)
What tipster wrote is true only if the mix of housing sold changes–e.g., if higher priced houses sell for less, but lower-priced houses don’t sell, and are taken off the market. Or if the top of the market comes down in price, but mid-level homes maintain their value. However, the increase in inventory means that buyers have more choices, and less pressure to compromise.
I think i’m going to jump off a bridge if prices decline 0.2% in 2007! lol
I am SICK TO DEATH of all this commotion about “median prices” with no mention EVER of the mix of units sold during the period. Especially the alledged month-to-month “losses” or “gains”.
The mix of units sold has a tremendous impact on the resulting median – so if, by chance alone, a lot more lower priced homes sold in one month than the month before, then the median price will plummet! OOOHHHH NOOOOOO!!!
People PLEASE! Have some perspective!