I was in my local coffee shop last week and ran into a friend. He asked me the question I hear more than a few times a week: “When is the real estate market going to go back up?”
There’s no question that we’ve taken a hard fall in our Orange County values – a very hard fall and we all long for the days that we could comfortably calculate our net worth, even if it was funny money and we weren’t planning on selling. Others are hoping to just see values climb back into the vicinity of their purchase price.
There isn’t good news here. It will be a while, likely a long while. But when I heard the question again this week, I had some better frame of reference to keep all of this last decade in perspective.
“Where would our homes’ value be if the bubble had never occurred at all?”
This may in fact be the better question. If the unsustainable appreciation was never a factor and we experienced a normal rate of growth, what would that look like?
Recently Mike Simonsen, of Altos Research, turned me on to the company that’s examining and providing some of those answers in Macromarkets excellent web application Gap Gauge.
If you are curious about where we stand nationally, in various cities around the country, it’s a fascinating perspective and way to judge where we are in the ‘burst’ of this unfortunate bubble. Although Orange County is not specifically charted, Los Angeles and San Diego are. It’s interesting to note, we are still slightly higher (using Los Angeles numbers) than we would be had we just experienced ‘normal’ growth.
Sadly, I know many of us are looking for the day when homes will return to previous values (I know I do), however, it may be time to get comfortable again with a slow, more sustainable type of appreciation.
It’s sorta like the difference between the motorcycle and the minivan; it ain’t sexy, but it might just be a little safer.
