If I am going to be perceived as a Serious Real Estate Blogger, I need to at least give passing mention to the new Case-Shiller price indices published for August. But, first, I have to get something off chest. You see, this morning it is auto insurance that is on my mind.
On occasion, I take a brief spin through our blog’s spam bucket. Mostly, it is just a bunch of trackbacks from “splog” sites (those lower life forms that steal our content to populate a site geared toward earning pay per click dollars). This morning, though, one comment in particular caught my attention.
Thanks for the providing good information. I will also suggest to consider buying an auto insurance for your car as it has become inevitable to buy auto insurance these days.
You said it, sister! I not only have considered buying “an auto insurance,” but I have purchased many auto insurances over the years. And as our loyal reader points out, this has indeed become inevitable. He (she) left me a link to a site where we all can buy an auto insurance, so shoot me an email if you are interested.
The only thing I hate worse than spam is stupid spam.
So, I will move on to Case-Shiller like the good little blogger I am. Here is the link to their big, scary graph showing big, scary declines in their year-over-year home price indices. Remember, their methodology uses “matched pairs,” with the idea that we are comparing apples to apples (except that the first time the apples sold, the happy departing sellers were heading straight to Aspen for a little vacation using the windfall profits from their sale, while the apples which sold most recently had probably been stripped of all sink faucets and door knobs prior to the owners being evicted). Hit particularly hard were the Sun Belt cities, including San Diego.
I gave you the link, so I am not going to reproduce the trend line here. Rather, I will keep it simple and describe it. Imagine you are on a ski vacation at the top of a black diamond slope. We will call you “2004.” Now, imagine you are looking down at the lodge situated near the tow ropes at the foot of the bunny slope, the one where they serve those yummy Irish coffees and play classic rock music. Let’s call that lodge “2008.” Draw a line between the two, and you have your Case-Shiller price index graph.
The real estate market will reverse course; it always does. The big question remains “when.” I can’t profess to know the answer, but I have an idea of what it is going to feel like. We got to the top of that price mountain pretty quickly. The lenders were operating a lot of chair lifts to make it easy for us. We skied down pretty quickly too. But now the chair lifts are broken. We will get back up that mountain eventually, but now we are going to hoof it. It will to be slow going, and it will take a lot more effort. We are returning to the days when a down payment was actually a prerequisite of purchasing a home. We are returning to the days when one’s ability to pay the debt was required to be demonstrated and verified. We are returning to those times when home ownership wasn’t considered so much a divine right but an opportunity and a privilege to be earned. Prices will at some point move up that mountain again, but it’s going to be a very gradual accent, and the accent will probably involve a few rest breaks along the way.