In for a Surprise

North County realtor and regular Nerd’s Eye View quotee Chuck Smiar is back with some words of wisdom in a recent North County Times article:

“There’s buyers out there, but they’re just not buying. They’re sitting on the fence, waiting for (prices) to drop more. They’re going to see it drop and then they’ll wait for it to drop some more,” said Chuck Smiar, a Prudential Realtor in Escondido. “They all think it’s going to go to zero, and they’re going to be in for a surprise.”

Well, I’m not quite sure what to make of this one. For starters, what is the significance of these buyers who aren’t buying when they are absolutely swamped by sellers who aren’t selling?

And who is it, exactly, that thinks that home prices are going to zero? It’s true that many people feel that San Diego home prices need to decline to levels that are justified by economic fundamentals such as local rents and incomes, but is it maybe a bit melodramatic to say that such people think that homes prices will go to zero? Yes, I believe it is.

The quote wraps up with the obligatory attempt to scare people into buying before the market runs away from them. But we’ve heard this tune before. A year ago almost to the day, Chuck issued the following warning to hesitating home buyers:

“I think it’s sort of a false drop, if there is such a thing in real estate,” Smiar said, in referring to the single-family home sector. “If anyone is going to buy, they better buy now, because things are going to turn around. We’re going to start seeing a slow increase in prices.”

Later, in May of 2007, the U-T paraphrased Chuck as saying that the market was “flat — not falling.”

I’ve created a graph of San Diego home prices overlaid with the timing of Chuck’s forecasts. All things equal, his track record so far would tend to indicate that if anyone is “in for a surprise,” it’s Chuck himself.

— RICH TOSCANO