The Future of Pricing

propchef wrote:

SJ-Chris wrote:

propchef wrote:

SJ-Chris wrote:
Just one data point....

Using Cruise America rental fleet sales as a data point, RV prices are still up 60-70% from 2019. I bought a couple then, and I know what they are selling for now.

On a slightly related note...Home prices shot up incredible amounts over the last 3 years, and now they are taking large steps down in price.

I expect RV prices will reduce over the coming year or two. Not to the same levels they were, but lower than they are now.

-Chris

Large steps down? Not in San Jose (from your sig) where Redfin reports sales prices .8% UP over last year. What's been slowing is the pace of sales (number of units sold) and the rate of price increases.

I've seen a settling of the market, but nothing approaching "large steps down."

I happen to be an active real estate Broker in the Bay Area for over 20 years...I have multiple listings in contract at this very moment. Believe me when I tell you, Yes there is a significant reduction in home values going on at the moment (starting ~April/May when interest rates started shooting up). Here's some data I just put together...



I've got my own opinions about what will happen over the next months and year or two, but as this is a RV forum I'll keep it to myself. Feel free to PM me if you'd like.

Happy Camping all!
Chris

Here you're comparing asking vs selling price, not year-over-year sales comparisons.

Even with this example, we do NOT see "large steps down," we see selling below the asking price.

The sky is not falling.

I'm NOT comparing Asking price vs Selling price. Asking price is somewhat irrelevant. Selling price is ultimately the indicator of what buyers are willing to pay for a home. If you look, in the data I provided, at what homes ACTUALLY sold for in April vs August you will see an Average price drop of $229,000 (14.7% drop). You can also see in the rightmost column that the Average $/sf that buyers are willing to pay has dropped from $976/sf to $831/sf (although $/sf isn't really the best measure of value).

Yes, prices have dropped from their peak of earlier this year by almost 15%. That's a decent step down in my opinion.

Is the sky falling? ABSOLUTELY NOT! I do agree with you on that. In the last 2.5 years in particular home prices have shot up an incredible (unsustainable) amount. So even though prices have dropped ~15% in the last 4-5 months overall prices are still up from where they were 2.5 years ago. I suspect they could drop further (some, nothing crazy) from where they are at now (especially if interest rates continue rising and if the economy stalls, especially high tech), but this is likely just a correction from over-inflation of price during the last couple of years.

At some point in the future, as the cycle tends to do, interest rates will fall and the economy will improve. History shows us that when that happens home prices start their climb once again to new heights as demand increases. Thus Bay Area home prices trend upwards.

-Chris