San Diego Housing Bubble News and Analysis

In a few zip codes, we may be close enough that the drop from here to bottom is not large enough to worry about.

Plus, the Piggs are finding deals, possibly even driving comps to the bottom.

So, maybe the market hasn't bottomed, but the Piggs are shopping under the market.

It is fascinating, though. A hint that someday this will be the "unreasonably bullish" real estate blog when everyone else is scared.

When Piggs start buying in Carmel Valley, that'll be the bottom.

Is it just me or has anybody else noticed we are experiencing an energy shock. Also looking at LEH we are finding ourselves still in the throws of the credit crisis, also employment is taking a nose dive. Has anybody else noticed that the pollyannas on CNBC look really stupid right now. IMO there are way too many head winds (some approaching hurricane force) for the "bottom already come?". I imagine you can find property at the bottom end of the market that will cash flow but don't expect any appreciation for years there. Just my two cents.

I think sdrealtor said it best (see below)

For the well informed, well advised, ready and willing buyer there can and will be great opportunities all along the road over the next few years. Most opportunites are not good but they will be great ones out there for the opportunistic individual. Educate yourselves, know what you want, how much you think it is worth and be ready to strike when you find it. It may be tommorrow, it may be next month, it may be 5 years down the road. You never know!

My two cents:

Just remember the phrase:

Pig's (not piggs) get slaughtered

Works in both market directions.

"
When Piggs start buying in Carmel Valley, that'll be the bottom.
"

Right on!

They are buying !!! better hurry or you will miss out

Ya. sdrealtor did say it quite well.

If you are a High Networth
Submitted by farbet on June 12, 2008 - 11:36pm.
If you are a High Networth Person.Over 1 million up. Schwab,Citi-Smith Barney are giving loans against your portfolios.No money down and 5/1 and 7/1 adjustable Jumbo.
If you are over 591/2 your retirement is counted as your income also.
These are the people buying. Retirees from out of State.

With 4 1/2 years of inventory in the pipeline, the bottom will be deep and long. If you really, really want a house and find something that fits your budget in the meantime, hey go for it.

People buy homes to live. It not fully dictate by the financial consideration. The statement of 4.5 years inventory may not apply to the specific area. From my observation, new homes in CV and 4S are selling pretty well.

For first-time buyers like myself, on a budget, buying short on the bottom is pretty much a necessity.

I'll agree that all real estate is local, but from what realty trac is showing, there are foreclosures aplenty in every zip code.

As a group, we Piggs started off being few in number. The group got bigger as time went on, the market cooled, and more people jumped on the bandwagon. I anticipate the same thing will happen, in reverse, as the pricing drops. People will peel off when the prices hit their comfort range, which will be different for everyone.

There probably will be some uber-bears who will ride it all the way down, and a few of them probably won't jump in at all regardless of how far the prices drop.

We aren't at the bottom. We are far from it time wise. I can't put a percentage on how much further we will drop but I would say taking on a large amount of debt and locking yourself into a community probably isn't the safest bet right now.

Think of all the things that are unknowns that are starting to surface right now:

Energy, food, job market, interest rates, gas, etc. By getting into the housing market and buying a home you are locking yourself into an area and home. Not to mention a large amount of debt. I think it is safe to assume that even if you got a good deal your ability to sell your new home in the next few years will be very tough.

I think most people get excited about the price drop and their ability to buy a home they have coveted for several years and forget that other variables are changing around them.

My2Cents

No, the tone has not shifted. RE continues to deteriorate in CV; inventory continues to climb, NOD's continue to climb, seller price reductions continue...This Pigg, at least, is not pulling the trigger yet in CV. Late summer and into Fall, things will start to get more interesting, but 2009 may be best.

Is the OP suggesting that the piggs are numerous enough to dictate where the bottom is? I'd say they are too few to make a difference. IMO one way to generally describe the piggs is cash-heavy investors waiting to scoop up some bargains no matter what the MSM and Joe-6-pack are doing (buying, selling, calling bottom, etc). We are a minority!

I jump when Bugs,Surveyor,Rich, Nostradamus or a few others say so!

They make up my personal bellwether.

sdrealtor did hit it on for me but also so did sdduuuude.

"Plus, the Piggs are finding deals, possibly even driving comps to the bottom.

So, maybe the market hasn't bottomed, but the Piggs are shopping under the market.

It is fascinating, though. A hint that someday this will be the "unreasonably bullish" real estate blog when everyone else is scared."

"Shopping under the market". I really really like this term. As for the more prime areas, hell no we are not done yet. These people have the most bullish sentiment and most cash (debt) to bleed till all hope is gone. We are an easy year off in the better areas.

Edit: Don't foreget where some of the pigs are buying. You really should discount pigs buying in IE as you cannot compare to SD unless you compare it to Chula Vista I guess or below the 8.

Some observations about SD economy

Some parts of SD economy are in trough at present, but other parts are not.

Heavy construction is very strong. Bio - stem cell funding from prop 71 is about to get flowing. A/E community is fairly busy. Many big project working their way thru planning ( eg hugh Marriott by ballpark ). Pendleton has large amount of allocated $$ for buildings, ditto Navy at 32nd. Bio conference has many job openings for SD area.

Are there problem areas - absolutely yes, but compared to alot of the rest of US we look in pretty good shape. Not every area obviously such as Eastlake, Vista, San Marcos and others that can be named, but lots of other areas are becoming more stable abeit at a lower level than 2005/2006. So choosing the area is most important.

One point that I made in my post missed getting over to this thread. Residential Real Estate markets are very, very fragmented. There is no such thing as a bottom for a every house, only a point in time when the marketwide data/statistics hit a bottom. You make your own bottom through hard work, patience and a little luck.

Wow bjensen I'm honored to be on that list.

The only semi-IE area I'm looking at is Jamul because I need space and I've heard such good things about it from Rustico and other residents. That place is for me to live.

For rentals I'm looking in Mira Mesa (I'm sticking West of Cam Ruiz), Sorrento Valley, and Clairemont/Bay Park. I'm never going to the Stepford wife towns of CV or 4S, I just don't like it and reminds me of the movie Little Children (do see this movie). This is just my personal opinion. The premium to live in those areas is, IMO, not worth it. Of course, those places are also depicted in Weeds.

Anyhow, prices are still about 25% off what would work for me. We know about foreclosures and we speculate about shadow inventory. One fact is that rates will rise and I think that factor alone is enough to warrant a 25% drop in price so I'm fine, just saving my money for that day. There is no hurry at all.

Just remember the phrase:
Pig's (not piggs) get slaughtered
Works in both market directions.

Actually, its "pigs get fat, hogs get slaughtered".
So its good to be a pig(g)!

2012

Is the soonest I would buy in California. By then hopefully I can have enough to put 20% down and get good deal and mortgage. Of course if the FED raises interest rates, it may be even longer unless price drops a lot.

It certainly seems that a lot of investment money thinks this is the time to buy distressed properties.

notice where waiting hawk is buying. Hesparia and Arrowhead. one is at the fringe of SoCal metro, and the other a vacation home/2nd home market. the prices he got are pretty decent but again the fringe always find the bottom first.

btw, hawk, good job on the two finds!

Speaking of CV,

The sh!t has started to hit the fan in some locations.

http://www.sdlookup.com/MLS-081027657-37...

SFH@ $286/sqft. The house isn't great, BUT now we're talking.

http://www.sdlookup.com/MLS-086034819-11...

SFH@ $276/sqft. The house isn't great, BUT now we're talking.

selfportrait

----- Sour grapes for everyone!

I read all your comments and am reminded of the stock market blogs...much speculation and little fundamentals. Further, I am willing to bet that most of you will continue to act giddy as the market continues down until you realize that you in fact missed the bottom. Don't get me wrong, I enjoy the venue but wish you would expand the meat of the conversation/comments to include some DD and supporting evidence as to why you are content to remain on the bench.

For example, why did the 'rate' of forclosures peak in April? I suggest it is because the market peeked in terms of number of fancy loans (for new homes and refi's) in April of 2005 (3-year arms, 2008, ...). It is worth noteing that May 2005 was the second highest and the trend continues down from there.

I am not suggesting that we are at the bottom. Merely that I expect crazy "loan-induced" forclosures to decline. The variable in the future that may very well cause forclosures to decline at a slower pace than the rate at which the loans cooled off or stabilize at the current rate is the weak economy. It doesn't matter if you were smart, put 20% down and got a traditional loan; if you lose your job and can't make payments - you will be forclosed on.

But the economy brings up other factors I have not come across in your conversations: rising inflation and interest rates. Here is where I make the arguement that buying now is in your best interest whether it is a home or long term investment.

I am not sure how old most of you are, but it was not too long ago that double-digit home loans were a reality. Say you find a nice house in CV tomorrow and get loan for 650K @ 6.25% - your monthly payment is $4,679.25 (assuming 1.25 taxes/insurance and no PMI). If you wait until that same house drops a further 100K you may very well be looking at 8.25% which makes your monthly payment $4,704.88. Of course, this assumes you will even be able to get your loan. Check current rates, trends and history before you discount me as a nut. Prior to the late 90s, 20% down was the standard, not just a practice for the rich and BusinessWeek just ran an article today predicting another 1/4 percent rate hike in September.

Consider inflation - this is where the weak economy works in the home buyer's favor. As oil, corn and other commodities go up, so does the cost of living (hence inflation). The thing is, inflation is another name for a weak dollar (it takes more of them to buy the same dozen eggs and a gallon of milk). That means wages usually go up as well though at a slower rate than expenses, but up none the less. This sucks unless you are paying for fixed rate debt. How many wheel barrels of worthless dollars do you think it takes to payoff a home loan?

Now, I am not a doomsday fanatic nor do I think we should forward our mail to the nearest Hooverville but I am pretty sure we are in for interest rates and inflation the likes of which we have not experienced in recent history. I do believe we are at the intersection of declining prices and increasing rates and, while not at the technical bottom of the market, this is the best time to be buying.

In the spirit of full disclosure and putting my money where my mouth is, I am currently in escrow. That means I truly believe this, am comfortable moving for with the purchase and not just trying to convince myself things will be alright with a bad decision.

I'm one of those annoying people who feeds french fries to birds near where other people are sitting and I also like to feed trolls, even long-winded, mathematically challenged ones. Are you the artist formerly known as Rather Opinionated a.k.a. the OP of this very thread?

Say you find a nice house in CV tomorrow and get loan for 650K @ 6.25% - your monthly payment is $4,679.25 (assuming 1.25 taxes/insurance and no PMI). If you wait until that same house drops a further 100K you may very well be looking at 8.25% which makes your monthly payment $4,704.88.

Are these the "fundamentals" you bring? The suggestion that you should pay $100,000 more now in order to save $25.63 per month in payments later is quite an interesting investment strategy. Do you realize that it will take 3,902 months of $25.63 in savings to make up for the extra $100k you paid? 325 years.

Give me the $100k discount at 8.25% any day. I'll invest the $100k in stocks (please point me to the aforementioned stock market blogs).

nighty-night!

PQ Kid - seen these charts?

http://www.bubbleinfo.com/statistics-200...

http://www.bubbleinfo.com/statistics-200...

4plexowner: I was thinking the exact same thing. Thanks for posting the charts. Maybe now he'll get the big picture. We are NO WHERE near the bottom.

"I read all your comments and am reminded of the stock market blogs...much speculation and little fundamentals."

This is a first for Piggington. What gave rise to this blog was its emphasis on the fundamentals. This blog and many like it accurately called the housing boom what it actually was.....a housing bubble. That was long before it was popular to say so.

PQ Kid, read the "Bubble Primer" to get a better understanding of the context of the discussions on this blog. Of course there is speculation about how this will unfold but most of the arguments on this blog are deeply rooted in data. You left one thing out of your analysis on why now is the best time to buy, here is a quote from Rich's "May Resale Housing Data Rodeo"

"I myself don't see much of an aggregate bottom coming anytime soon while foreclosures continue to pile up at such record-shattering rates. The 1990s bust saw prices fall for 6 years in the face of a foreclosure rate that was barely more than 1/3 what we are seeing now. The pickup in sales is certainly a candle in the dark, but it just doesn't mean all that much when those sales continue to be overwhelmed by a torrent of new foreclosures."

eccen in esc

hasta la vista Piggs. I just bought. Going out to the sticks to grow food and drill a well. Got a pretty good deal. I will still be checking in here from time to time - good luck