Friday, June 22, 2007

Beach Cities: May 1995-1999... Why Didn't You Buy?

Sand Dune Park... Manhattan Beach

After I posted Beach Cities Sold May 2000-2007 I had people ask about home prices in the 1990's. That always makes me laugh.. as if numbers from 10+ years ago have much to do with today. It reminds me of people who constantly talk about how much they weighed 10 years ago. That means nothing... it's what you weigh today that matters. The same is true of home prices.

I remember the market in 1995-1999. Most of the foreclosures were over and people who had lost their jobs were finding work again. Interest rates were good around 7.5-8.5% and life was moving along back to normal in the Beach Cities.

There has always been a certain group of people who are afraid to buy a home because the price might go down. When I entered real estate in 1979 these people were waiting for prices to go back to 1968 levels. In 1995 they were waiting for prices to drop back to 1987 levels. And today there are those who are waiting for prices to drop back to 1997 levels. The only thing that has happened over the years is that prices bounced around and then eventually went up and up and up. It's been the same story since my family moved to California in 1952.

Sold May 1995-1999 Manhattan and Redondo

In May of 1997 you could have bought a median priced Manhattan Beach home for $538,000 but a lot of people didn't because they knew the market was going to crash. Why didn't they buy in May 1999... heck it was only $620,000.. but people didn't because prices had gone up since 1997 and they knew that the market would soon crash. In 2014 when I post prices from 2007 and they are vastly higher.... I'm just going to repost this article and ask.. Why didn't you buy in 2007 when prices were so cheap?

The demise of the California real estate market has long been prophesied but has rarely lived up to expectations. A 1999 article titled California, Nation Headed in Opposite Directions on Home Ownership decried how terribly overpriced California real estate was compared to the rest of the country. The average California resident would never be able to own a home when the median price was $208,000. Then there is the 1988 tale of One California Family Caught in the Middle where the parents worried about how their children would ever be able to afford a home priced in the $180,000's.

Agents get slammed because we don't tell the truth about how terrible the real estate market is... but the problem is that it isn't that terrible. It's not great but it isn't terrible. Often our memories are short and we forget that those homes priced in the $180,000's were out of reach for many because they weren't making enough to qualify. Today's market is no different. People look longingly at the prices from 1995-1999 and forget they could have bought then.... but didn't because many were waiting for prices to fall.

Today those who bought in the 90's are thought to be lucky. If they sell at a profit then they are greedy. No one remembers that these people took a chance at homeownership while others waited for the market to fall. They struggled with the monthly payments at interest rates that were between 8-10%.

Yes there is a certain amount of luck associated with the housing market but mainly the luck is only because you bought. It's like the old joke about the blonde named Sally who asked God to let her win the lottery.. every week she checked and she didn't win. She was really mad at God and wanted to know why she hadn't won yet.... and finally God replied: "Sally... help me out here ... you have to buy a ticket".

You have to get in the game before you can win a prize... if you don't take a chance and buy a house you will probably never own one.... Sometimes you have to buy a ticket !


Bob Carney said...

Great analogy...they need to buy a ticket to win the lottery too. But they don't play it until its worth $300 million, like $10 million is not enough... I don't get it... people nows the time to buy!!!

Kaye Thomas said...

I know people are afraid that prices may go down 10%+ ... but others just don't appear to get it that renting and waiting for prices to drop is not great financial planning.

Laurie Manny said...

Great article Kaye, it is so true that You Have To Be In It To Win It!

Kaye Thomas said...

Laurie.. Can't win the prize if you don't buy the ticket..

Anonymous said...

That's great Kaye. You are a great lady. We met you an an open house a few weeks ago and really enjoyed your insights. We just bought a place in the trees and couldn't be more pleased.

Kaye Thomas said...

Thank you for your kind words...I'm glad you found the right home for you.. and sorry you already had an agent..

Anonymous said...

Interesting post Kaye.

I'm curious, how difficult is it to get hold of data from 1990-1995 to complete the picture of the 1990s decade?

Kaye Thomas said...

Anonymous 11:04,
1995 is as far back as you can go with the computer for records from the MLS.. There were some comp books but I'm not sure if there are any around any more. There is some CAR data but I found that I couldn't always find info for a particular city....So the answer is it's fairly difficult.. otherwise I would have gone back to 1990.

Anonymous said...

Thanks for the response Kaye.