Just how do you measure a bubble?
LA Times blogger Peter Viles is reporting on the S&P/Case-Shiller housing price index results. The news is not surprising, home prices are falling. If you haven’t figured that out you’ve been sitting under a rock. But just how do you measure a bubble?
My 3 year old uses terms to measure his bubbles – “Big one!” “Bigger!” “Big as my head!” “Big as the HOUSE big!”. But how do you quantify the price values. Well, the S&P/Case-Shiller helps give us a number to understand this. They report that since 2000 the house values in LA have gone up 240.43% (Miami, Washington & DC all follow suit with an increase of 200%+). So it’s no surprise that our area is taking the biggest hit as the market is “correcting itself” a bit.
We’ll look at a few homes and how they’ve been affected by the bubble deflating…
22836 Driftstone, Mission Viejo
5 bed/3.5 bath,
3,400 Sq Ft Single Family Residence
Previously Purchased: 12.28.99 for $478,500
Listed on 10.23.07 for $1,049,000
Reduced 12.9.07 to $1,019,000
Reduced 1.28.08 to $999,000
Moral of this story – Still going to make a healthy profit even if continues to reduce
25031 Mackenzie ST, Laguna Hills
5 bed / 2 bath
2,606 Sq Ft Single Family Residence
Previously Purchased: 2.13.01 for $320,000
Listed on: 9.9.07 for $805,000
Reduced 9.12.07 to $775,000
Reduced 10.11.07 to $755,000
Reduced 12.1.07 to $730.000
Reduced 1.10.08 to $729,000
Reduced 10.26.08 to $728,000
Moral of this story: The same thing – still coming out way ahead! Kudos to the seller…
While the prices are dropping, if you bought at least 5 years ago, most people seem to be in good shape selling. For those who bought in the last few years, the story isn’t as sweet.
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