In Southern California, sales are brisk for homes priced near or below the current $265,000 median. The majority of those homes are foreclosures, so prices are often low enough to draw multiple offers from potential buyers.
Richard Toscano, who in 2004 started a popular San Diego housing-bubble blog called Piggington's Econo-Almanac, lately has been posting data showing home prices are favorable compared with incomes and rents in lower-priced parts of San Diego.
He's drawn fire from some, but others who have followed the blog for years have recently posted comments detailing home purchases. Toscano, who sold his San Diego condominium in 2002 (he said the sale was due more to a job transfer than his belief in a bubble then), is still holding off on buying for various personal reasons, he said.
But he thinks it's no longer dangerous to buy in some areas.
"We have this weird, disparate bottoming," he said. "In some areas we may be there already, but others are not nearly as close."
Kiesel thinks places such as his home turf in Newport Beach are among those headed for steeper price drops. Interest rates for jumbo mortgages are still relatively high, and lenders are routinely requiring 35% down payments on loans greater than $729,000, limiting the pool of people who can afford homes in the millions of dollars, he said.
Kiesel didn't want to talk about the price details of his own home sale and purchase, but said that when he buys again, he will require jumbo financing.
In that segment, Kiesel said, demand is low because few people have the income and savings to afford the high prices and obtain loans. Supply will grow, he said, as owners of expensive homes purchased during the bubble years find they must sell at a loss or be foreclosed on.
Although widespread foreclosures have brought prices down in lower-priced areas, more affluent homeowners have been able to avoid defaulting on mortgages thus far.
That's about to change, Kiesel says, because falling property values are putting more wealthy homeowners underwater, where the value of the home is less than the mortgage. He estimates 35% to 40% of homeowners nationwide will, by the end of next year, owe more on their homes than the properties are worth.
As prices continue to fall at the high end and those homeowners get deeper underwater, they'll have to sell at prices well below today's levels, or get foreclosed on, which will result in the homes being resold by lenders at cut rates.
Meanwhile, rents are falling. Kiesel's rent hasn't increased and others in his building have gotten rent reductions recently, Kiesel said.
The house Kiesel sold in 2006 has been back on the market for about six months, he said. Would he buy it back?
Only if the owner "would sell it to me for 50 cents on the dollar," Kiesel said.
He doesn't expect that to happen soon.
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Timing strategies: two profiles
Professor of public policy, UCLA
Bought home: in 1997 for $465,000
Sold: in 2005 for $1.39 million (the buyer sold the home a year later for $1.7 million)
Current residence: still renting an apartment, with no plans to buy
Co-director, Center for Economic and Policy Research
Bought apartment: in 1997 for $160,000
Sold: in 2004 for $445,000
Bought home: in 2009 for $650,000
Source: Times research