San Diego Housing Bubble News and Analysis

start looking mid september and write your offers in October/November. thats when the best deals will be struck and the least competition will be out there.

good luck

3) We follow a trend line that looks speciously like they line from 1991-1997. Spring rallys fizzel into fall declines as the economy just kinda sputters and frets. RE agents bottom call every spring and remain suspeciously silent as fall drops egg's on faces. Happy talk from government is loud and perminate, as they are obviously big belivers that if everyone thinks itll all be ok, then it will regardless of everything else.

Personally, I am not waiting for a backlog of houses from the banks to magically make things change direction. They obviously have chosen to not take that path anymore. REO will trickel in at a rate that can be managed by the banks and will flow for years to come.

Id wait for two things to happen:
a) interets rates hit 5.75%+
b) October.

I've stopped looking except for entertainment purposes. My rent hasn't gone up in years. Unless you want to live in the outlying areas like Temecula (which is nice if you work and live there), there still don't seem to be a lot of good deals available. My advice? Get used to renting. The people who are in those places aren't going to drop the prices until they're forced and guess what, they're not going to be because they're going to get loan reworks. As for the bank foreclosures, those are being held back with help from the government and your tax $$$. Sucks but that's the way it is. Welcome to the American Soviet. Get out and enjoy the sunshine. Go ahead and paint the interior of your rental. Who cares?

Don't you think the $8k housing credit that expires 12-31-09 will have some sort of effect on last minute buying in 2009? I do. If interest rates remain low throughout the year, I expect this mini-bubble to continue at least through 2009. The lynch pin is going to be interest rates. If these start to rise closer to 6%, then I think things will cool off quickly. However, I'm not sure our fair leader will let that happen.

Also, remember that in most RE markets most movements up or down have the seeds of the next change sown into them in equal magnitude. Or think of it as a big ship that turns slowly, itll take many turns to put it back on course.

What I mean is that we had a RE bubble of gigantic proportions, and have a recession/fall to match.

We had almost no demand last year for houses, and now it is crazy out there with 20 people lined up for a house not even on the market.

It is crazy out there and prices are starting to rise as inventory plumets and interest rates are just plain stupid, and this fall I believe we will have historically low but non stupid (~6%) rates with a balance of inventory on the market inrelation to demand. (itll be brisk, dont think you can window shop forever, it just shouldnt be a frenzy)

I would say that we should have high rates this fall as a correlation to out now low rates, but the government has obviously decided this is unacceptable and will financially rape future generations to make sure it isnt so.

that may be true.. wonder though if in at least the neighborhoods of san diego where I'm looking if there's a dampening effect on that credit due to the income limit?

As in, when the entry level 2/1 craftsman goes for $300k today ($450-500k at peak), and people are supposed to get things that are only 3x income.. so 100k salaries.. which is also when the 8k credit is completely phased out (over simplfying a bit I know.. that assumes individual making purchase and taxable income,etc.). Seems like there's a % of people there that are going to be indifferent about any credit.

i know, I should be a happy renter.. but I've got a couple hobbies (brewing, 1978 280z repair) that has me convinced I want a SFH.. well, that I want a garage really and the house typically comes with it ;) So, everytime my landlord sends out the notice reminding people they aren't allowed to even store anything flammable, let alone work on a car.. that fuels my own fire of wanting control of my dwelling.

Yeah it sucks Tom, I know. Of course I used to own a place here (sold in 2005) and it had a draconian HOA so sometimes there's not a lot of difference. Maybe try to get a rental that has a garage? That's what I did.

Oh, and the $8K buyer credit? I'll bet that gets extended for another year...

OT thread jack: Tom, did you go to the SoCal HomeBrew Festival in Ojai over the weekend? I missed it this year, but have been in years past when they used to have it in Temecula. All-grain or extract?

I like where I rent, but brewing would be much easier in a bigger place. Too much of a chore to be enjoyable in a cramped apartment, especially bottling.

Sidebar:nah, picked up a flier at hamilton's and then kind of forgot about it. And extract.. going to all-grain is on the list of reasons of wanting a garage/house/yard.

appreciate the comments so far.. liking the october/sept suggestions of evaluating where we are there.. and idly keeping an eye on interest rates too is a good suggestion.

now, comes the hard part.. actually manage to stop seeking out the info and "let it go" for the time being.

Tom,

I look at my rent which is 35% of the cost of ownership in my particular situation and I...

1. Expect a spring rally, it is unrealistic not to.

2. Expect agents to call the bottom.

3. Expect agents to call the bottom.

4. Expect agents to call the bottom.

5. Expect agents to call the bottom.

etc etc etc

if you want to find a way to "let it go" just find a place you like and see if there are bids on it.. you'll see there are 20..

then find another one you like, and see if there are bids on it.. ahh.. of course there are..

maybe..

Find one that was just listed! Not even on for a day and run over there! What?! Already has offers?

if that doesn't put you back on the fence I don't know what will

yep.. been banging my head against that wall which is the source of finally coming out of the dark and posting a message. Needed some reinforcement and a strategy, which i think i've gotten from the thoughts here, so succesful in that at least.

I have been trying to "let it go" since 1995. I think that tracking real estate as a future, past or current owner (or combinations thereof) is an incurable disease, which many of us suffer.

I have a few questions...
1) Do you think govt. will keep $546,000 conventional and $697,000 FHA limits in SD for 2010?
2) Will they keep the $8000 tax credit?
3) Will they keep these insane low rates?

We want to buy at the end of the year for points that SD realtor pointed out. But the above are making me think prices would have to tank in 2010 if the govt drops the above.

The houses in East County are cheaper than some in North and South Park, unless you really wanted a Craftsman and you would be able to work on your hobbies.

FormerSanDiegan, have you really been looking seriously at RE without buying since 1995? I thought no one came close to how extreme I was.

I don't think I'll reveal here, even in the safe Pigg nest, how long I've been looking without buying. But I was infected with the "tracking RE" disease before most Piggs were born. It really is incurable.

No. I am a future, past, AND current owner (hence my comment about combinations). I've owned three houses in San Diego (two at a time from '00 to '05) and currently still have one rental there.

When I was researching before buying our first house in the mid 90's I caught the fever and have been tracking ever since. I used to log the median prices printed in the U-T every month for my favorite zip codes and plot these over time, looking at the past bust in the early 90's. Being an analytical type, the emergence of blogs like this one and "webification" of data has only sucked me in further.

I am a hopeless case.

Wow, I feel 100 times better about my RE obsession. Thanks guys!

I even thought about looking into getting some help.

I've been told Fall would be better but it's like catching that perfect wave. You just can't predict too hard.

Competetion is laughable at this point and so were the prices a few years ago. When it seems ridiculous, maybe we should just sit back & watch.

I'm glad I watched the bubble instead of participating.

It looks to me like part of the exasperation is coming from having very tight parameters. It looks like you want the cheapest decent house,with garage, within a limited geographical scope.I knowhte area well and I think I understand why you chose those limited areas within that general area, but it makes it tough(er). I understand that this is not only happening to you, but there is a pattern to it too. Waiting is likely to work out but if you want what everybody else wants in the fall, it could still be tough going. The fence sitters that do come off tend to want the same things.

One other thing, it is is a misconception to think you are only competing with people limited to 3X's income. Maybe people have cash or bring a larger down, use the bank of mom and dad. FHA can use a qualified family member or family-member-like cosigner. There are also people who might use a low down but only part of what they could potentially qualify for on income too.

One other thing, it is is a misconception to think you are only competing with people limited to 3X's income. Maybe people have cash or bring a larger down, use the bank of mom and dad. FHA can use a qualified family member or family-member-like cosigner. There are also people who might use a low down but only part of what they could potentially qualify for on income to

Exactly. And these people are always going to be around. I think I've realized that the house I want is ALWAYS going to be too expensive to purchase, so I'll just rent it instead for a lot less money. I've resigned myself to rent until I die here in SD.

If only my wife would let me rent forever, but she doesn't.......

Ok, so tell you the truth, I am quite confused on what's all the data flying in front of me from everywhere....

There is a problem of too much data and you just give up on giving serious analysis with any conclusion (for me)...too many moving parts, I am just dizzy looking at them.

Ok ok, relax, it's just a house KIBU dude. God, please don't let me become like formersandiegan or super patientrenter who been following house price since a decade ago... please release me and let me buy a house so I can sleep at night without going into this website and forever search for the uncertainty and all those inconclusive conclusions.. However, god, this is so fun!!!

You make some very good points, Russell. My parameters are very tight (realtor's nightmare). What would irritate me more than anything is settling for something and then find out later I could of had what I wanted (tight params).. i.e., the floor of those zip codes moving downward. However, if it becomes clear things are never going to get as cheap as I want in the area I want (i.e., I've missed the bottom), then yeah.. I might want to revise my goals. Then again, I'd also really like to find something in the next 18 months, so we'll see.

But until then, I'm pretty comfortable being picky, though i haven't really thought about it until now in the context of it putting me right in kind of the worst case of the competitive market right now. Something to ponder.

I am a little surprised how relatively sticky prices have been in your hood. On the other hand I was going to be surprised if they were not.

The area between the park, Hillcrest/University Heights and Kensington did undergo a huge demographic shift,as you likely know. If there is an example of the "San Francisco effect" hitting town that is it. However, prices very much follow perception. The trendiness, while pretty dominant has gaps.

18 months is a good window, If you can't get what you want but really want to stay there, I would suggest thoughtfully and patiently,looking in the gaps. While shoddier at first, it could possibly be a better move in the long run. You could get a bigger lot, a house with more potential and basically live in the same hood.I know many people who did this to good results over the years, including myself. The improvements are likely to keep catching up.

If you can stomach it, try to ponder going these few streets over,ones that are most likely to experience the positive changes we have seen, and getting the best value there.

This is a great and timely post because I, too, am "exasperated" and confused by all the conflicting data flying around. Some indicators are claiming a "bottom" (such as Robert Campbell's "Crash Index" in his newsletter that I get) while other indicators (such as my wallet!) are saying no way, jose.

Despite supposedly expert indicators such as the crash index, my gut is just not seeing a bottom right now. With all the Alt-A recasts coming down the pike right now, unemployment sucking... and I am not sure how secure my own job is right now. I want to get something on a fixed mortgage for absolutely the lowest monthly payment I can get, so if I do lose the current job I can still keep my dwelling on a lower income.

Rent is just right out. Rent gets hiked every year and as I have complained before, my pay has not risen to cover it. In today's sucky employment market, jumping to another, higher-paying job is looking unlikely at best.

So what would a price look like today if it was truly equivalent to the bottom we made in 1995-6? Well, I just happened to look at some condos in my area back then, which were selling for $100,000, and I took the CPI figures (use "Consumer Price Index History Table") and calculated what the equivalent price of that place would be today after inflation.

Turns out a $100,000 condo in 1995 would be equivalent to a $140,500 condo today because of inflation. This is equivalent to about 1999-2000 "nominal" price per Zillow (same exact condos). To top it off, these actual same condos that I looked at in 1995 are currently selling for $200,000 or somewhat above (well, actually, being *offered* for that). So, this implies no bottom yet, at least in my area.

But all this implies a "normal" market where all the foreclosures come out and settle prices back to a realistic level. Can the government(s) and the banks jimmy the market and keep these prices up at bubble levels (and out of my reach without a long and exasperating commute?) I worry...

I agree except for the slow trickle for years. Right now the banks are like a dam for REOs. They keep getting foreclosures piling up behind the dam but only let a trickle flow out. These are not good investments for banks, and not something that's in their best interest to hold onto. They are insolvent because of them and only something like RTC2 will solve that.

They still have a 700k strong inventory of REOs they have not sold from the 1st wave of subprime defaults and now we have much bigger waves hitting.

The Gov. and banks know there are x amount of people out there that will participate in bidding wars and buy at today's REO prices and they want to get those people tied up before they move to more drastic measures like RTC2?

Patience will be rewarded.

Just registered after lurking for some time. I sympathize with your frustration. After sitting on the sidelines for several years, I have started to look seriously in the areas that interest me (Lemon Grove, La Mesa). Recently looked at a short sale property in L.G. (3 bed, 2 bath, 1847 sq. ft.) on the first day it was listed and put in an offer at full asking as it appeared to underpriced. Listing agent finally responded after 3 days. Listing agent said had three offers she needed to proceed with the short sale and would be doing a multiple counter offer. Multiple counter offer never came. When finally reached, listing agent said sellers had picked the highest of the three original offers. This is the first time I have attempted to purchase a house. Is this way of doing business common?