<<Depends on your market. Here in Alameda county Calif during the last recession the mids lost 12% and the highs lost 23%.>>
I was in Pacific Grave, California, a few weeks ago, looking at residential real estate, wondering how prices there would fare if the USA drops into a deflationary depression (which I am rather expecting).
Currently, the "low end" in PG seems to start at $500k, the middle range starts near $1M, and the high-end stuff is out of sight. (Don't take this as gospel, it's just the way it seemed to me after a cursory tour.)
Since you are aware of how various price ranges reacted in the most recent recession, maybe you have a notion how RE prices in PG or Carmel might react if interest rates turn upward, then the refi boom ends, so consumers run out of play-money to spend, so unemployment rises, etc., resulting in deflationary spiral into depression ?
I am somewhat familiar with how Silicon Valley RE reacted to the recent economic downturn: midrange RE ($500k) continued to climb and is still climbing, while higher-end properties dropped quite a bit -- 30-40% from their highs in 2000, in some cases.
In short, I am thinking that high-end residential RE in Pacific Grove might do the same. Some experts I've talked to, though, seem to think the high-end in PG would be largely immune to all but the most catastrophic economic developments.
Your thoughts?
Thanks,
ig |
