The chart above is the updated Zindex showing the decline in Laguna Beach home prices and how the market now reflects October 2004 price levels. AND IT IS GOING DOWN RAPIDLY. A buyer these days has to operate without a lot of good information. Some buyers are lucky to be experienced in the market and do not have to rely on a real estate agent to spoon feed selected information. There aren't a lot of comps and most listing prices are wildly high. What amount should one offer? How far under asking price is justified?
I've been looking at the market on the "rollback" principle. That is if a market indicator has decreased to the same level as a point in the past, say 2004, I will make offers on a home based AT MOST on what that house would have sold for in 2004.
With that said, look at the latest Zindex for Laguna Beach. It has decreased to the point where it has rolled back to about October 2004. So my operating rule of thumb will be to make an offer based on the market price of a property slightly before October 2004.
2 comments:
Prices may fall faster in certain price ranges due to difficulty of getting financing for pricey Laguna.
I've been looking at 2003 prices as the 'don't pay more than it sold for then' standard for the last few months...
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