San Diego Housing Market News and Analysis

One of the best summaries of the current situation that I've read in a long time. Good find!

Yeah, good summary. But in all honesty, I hope it doesn't come to that. If things really get that ugly, I think even the renters of the world will have a problem. The country's economy as a whole will be crippled. It will be worse than the Great Depression. But then again, maybe the whole American economy needs to go through one so that our jobs can become competitive on a global scale again. Poor China. They'll really get hit hard if America's economy folds.

lol

FTW..

Perspective -- This housing bubble only occurred in several "hot" markets - California/Florida/Arizona/Nevada. It did not happen nationwide. Homes in other parts of the country appreciated in value at a year over year rate in a much more normal manner -- those areas should be fine.

So, while California's economy is what, 7th largest in the World, and the housing bubble will definitely criple those "hot" cities exposed to the bubble, in my humble opinion, it won't be devasating on a nationwide scale. That is of course unless more predatory lenders/banks go belly up and the unemployment rate increases all over the country.

This theory is given to you from my last reading on my crystal ball and it's been cloudy these days -- So it's probably a load of junk. :)

I think it spans over a little more space than CA/FL/AZ/NV. I heard the DC, NY, Mass, are getting hit pretty hard to. In fact, Boston has been over priced for a long time. It's still, to day, more expensive to live in NY, SF, Boston, than it is here in San Diego.

Anyhow, It looks grim, I am just not sure how grim it can really get.. Should we watch out for traffic delays over the Coronado Bridge?

Nor_LA-Temcu-SD-Guy

Went to that Trump Real estate and wealth Seminar Last weekend in O.C. (hey they gave you a free lunch and a Trump book).

Anyway when the guy who was doing the latest real estate get rich scam was done and now was taking questions up front. He was surrounded by people who all seem to be saying the same thing, ie...

I got one of those interest only mortgages and now I can't make the payments anymore !!! --- What Do I do !!!!

Anyway I thought it was interesting

I think that summary was well written, and accurate. I home there is a big correction, as there should be, I don't wish suffering upon anyone, but many people threw logic out the window on this one, they became emotional, and stupid. They bought with no money down, int. only loans, adj. rates, and then refied to all hell. They bought cars, trucks, toys, even more homes with their equity. They paid absolutely ridiculous prices for their mediocre tract homes. The taxes that they now pay are even more ridiculous. The home they just bought in 05 for $500K, should easily be worth $700k in a year or two, just like the last two years, right?

They did not think logically, they forgot history. They became impatient. They said to hell with saving up money, who saves, when you can take a loan out even for your 20% down? Some were duped by friends, family, even agents, and lenders. They saw at least one person make a small fortune on owning their own home, and did everything in their powers to duplicate them. Only the monthly payment mattered, not the amount owed, but still they now "owned their own home". They felt sorry for the renters in the community, while the renters wondered, "what's the difference, between me and them? I pay less per month than they do, and live in a nicer home. How can they own a home, when they owe all or more than what it is worth? With an interest only loan, they don't even pay down the principle balance, but what do I know? I just rent."

I don't think as many of these people will spent a lifetime paying of their bad investment, instead, I believe most in that position will just eventually walk away from their homes. Call me cold, but I won't feel too bad for them.

Thanks for posting that interesting article mayasako.

I agree with hipmatt. Americans will just walk away from their homes and keep on consuming... That will save the economy but kill housing. Consumers will cut back but not enough to kill consumer spending.

I've seen enough broke people spend like crazy to know that Americans view certain things as basic necessities of life -- cable TV, Tivo, movies on weekends, a newer car, new clothes, beer, soda, and of course everything that their kids clamour for. They'll move down housing wise rather than go without.

One example that I could point to is that people would rather go without teeth (dental care) than beer or cigarettes. I'm not too worried about the consumer economy.

What was his response to them not being able to pay for thier loan? That's what I want to know. Trump is smart. He moved his investment to our front living rooms where he can make money until we get sick of him. By that time, he will have bought a ton of property at rock bottom prices, ready for the next up swing..

My advice would be, walk and take the 7 year hit. In 7 years, it will be time to get back in the market. Just make sure you work on your credit score between now and then.

Trump recently started his mortgage company. I wonder how that's going. His CEO lied big time on his resume but Trump kept him.

It's still, to day, more expensive to live in NY, SF, Boston, than it is here in San Diego.

Of course it is. Salaries are significantly higher as well (SF and NY, at least; I'd imagine Boston as well), so I don't see that changing any time soon.

Not to say they're not inflated markets, but comparing major cities to San Diego isn't exactly comparing apples to apples.

Nor_LA-Temcu-SD-Guy

It was not Trump doing the presentation, Trump just gives his name to these scam-athons where there will be several scam artist pitching different scam ie.. EBay, Tax liens ETC...

The only Trump that was there was his son doing a motovational speaking part (not scaming anyone but the scam artists).

I will not say what he said, Just would not try it myself.

That being said The Ebay, and Tax liens presentations actually sounded plausible.

Not all of Trump's properties are doing well. Specifically his development in Palos Verdes, CA is bombing:
http://la.curbed.com/archives/2006/12/tr...
.....as is his television show The Apprentice. No amount of fueding with Rosie O'Donnell can save that show - or sell his houses.

Pete

Salary in San Diego CA: $50,000
Comparable salary in New York (Queens) NY: $49,118.63

If you move from San Diego CA to New York (Queens) NY...

Groceries will cost: 8.992% more
Housing will cost: 17.505% less
Utilities will cost: 48.43% more
Transportation will cost: 5.509% less
Healthcare will cost: 0.349% less

Maybe you mean Nassau county (Long Island)...
Salary in San Diego CA: $50,000
Comparable salary in Nassau County NY: $51,360.52

If you move from San Diego CA to Nassau County NY...

Groceries will cost: 10.192% more
Housing will cost: 6.91% less
Utilities will cost: 48.303% more
Transportation will cost: 0.187% less
Healthcare will cost: 0.732% less

Nope that's not it,

What about suburban New York? White Plains, Bronxville, Middlesex Jersey?
Salary in San Diego CA: $50,000
Comparable salary in Middlesex - Monmouth NJ: $44,855.2

If you move from San Diego CA to Middlesex - Monmouth NJ...

Groceries will cost: 2.282% less
Housing will cost: 24.278% less
Utilities will cost: 25.103% more
Transportation will cost: 12.336% less
Healthcare will cost: 9.898% less

Nope.

Only looks like downtown Manhatten is more.
Salary in San Diego CA: $50,000
Comparable salary in New York (Manhattan) NY: $73,359.68

If you move from San Diego CA to New York (Manhattan) NY...

Groceries will cost: 14.952% more
Housing will cost: 79.763% more
Utilities will cost: 55.652% more
Transportation will cost: 1.904% less
Healthcare will cost: 13.225% more

NSR,
I think you are misinterpreting that data as it is likely data for jobs located in those areas not people living in those areas. People on the Northeast corridor regularly commute to NYC from 2 hours away and the incomes tend to be very high for jobs in the City and millions of people comute there to work!

SDR

"I don't think as many of these people will spent a lifetime paying of their bad investment, instead, I believe most in that position will just eventually walk away from their homes."
________________________________

The only people who will be able to walk away relatively unscathed (if you call a 7 yr credit ding - uh, I mean credit crater - unscathed) are those who have not succumbed to the refi and/or HELOC market.

If a property owner finds themself in a situation where they cannot afford the mortgage payments and cannot refinance into an affordable payment, they will simply sell their property and take whatever profit the market allows. The idea of walking away from the property inherently assumes that the owner is upside down or will be upside down after transaction costs. In this situation, the owner can choose between selling the property and covering any shortage with an out-of-pocket contribution, or just walk away.

Unfortunately, walking away from a refi, HELOC and/or 2nd mtg. exposes the owner to a deficiency judgment for the loss suffered by the lienholder(s), including their costs. It also exposes the owner to being taxed for the difference in foreclosure sales price and the amount owed on the property - it's viewed as income by the IRS. Walking away may have more devastating financial consequences than holding on and some way, some how making the mortgage payments. In fact, I think it's generally found that most folks will forego just about all other expenses just to scrape together their mortgage payment.

which is why the downturn will take.. a... while....

In fact, I think it's generally found that most folks will forego just about all other expenses just to scrape together their mortgage payment.

We'll have to see about that one. I've watched enough _People's Court_ to know that most consumers are unable to stop consuming regardless of the circumstances. Perhaps you're right and keeping a house will change consumer behavior.

Time will tell what "owners" will do when the emotions are out of the house, or it's too emotionally painful to be in the house.

SDR, no I'm not.

It's cost of living. In each of the areas I listed, you'd have the same comparable total expenses and San Diego. Not more.

If you live on $50,000 in San Diego, you can get by with $49,000 in queens. $44,000 in NJ.

If you live on $100,000 in San Diego, you can get by with $98,000 in Queens.

I have family in the White Plains (NYC suburb) area, it is not more expensive than suburban SD.

NSR,
I think we are arguing two different points. I wasnt commenting on the cost of living, I was commenting on incomes being higher in those areas (and they are way underreported there also), that the higher incomes could better support the home prices there and that there is far less of a bubble in those areas. There is also alot more unreported income on the east coast as there are a lot more family owned businesses vs.nearly everything is a national chain out here. Walk into a family owned business on the east coast and offer to pay cash and you will reap a nice discount in many cases. Its an accepted thing back there.

BTW, I have family in the White Plains area (Somers and Briarcliff Manor).

Nor_LA-Temcu-SD-Guy

Fannie Mae furloughed all non-essential contract employees for about three weeks over the holidays and new year and just announced a hiring freeze with no end date set.

Then we're saying much the same thing.

Not only is income higher there, cost of living is lower there.

Now, can we just do something about the weather.

Nor_LA-Temcu-SD-Guy

The weather was good (warm) on the east coast (50's and 60's) until the last week or so.

This is an interesting report on salaries for comparable positions in various metros: http://charlotte.bizjournals.com/edit_sp...

Not surprisingly, SD beats out NY only for engineers, pharmacists, and secondary school administrators (worth noting though that posh school districts outside the city, such as Bronxville, pay much, much more than in the city).

When I moved here three years ago from Westchester County, NY, I expected it would be cheaper to live here, but quickly found that was not the case. Assuming one works in the city, lives in a suburb, and commutes by train, you're typically looking at a pretty drastic pay cut, similar housing costs, and increased commuting costs (even my car insurance premium increased) to move here. Income taxes are higher (assuming you weren't paying city income tax), food is more expensive, sales tax is higher in some cases...

oh, but I do enjoy the fact that I have only once turned on a heater since I've been here (this weekend) and I've never had to dig my car out of the snow

Commenting about the cost of living in Boston...vs San Diego.

The state sales tax is 5.5% compared to 7.75%...and in MA there is no clothing sales tax at all. Probably because you need so many more clothes here.

In New Hampshire there is no sales tax, period. So a lot of people commute to Boston from NH....although the NH property tax is reportedly higher.

I would say that when I compare Boston to SD, condos and detached homes are more expensive in SD. The Boston real estate market is also declining and is still overpriced --but SD is completely unrealistic. The market in Boston is a lot of renovated old buildings/homes and SD is mostly new....but still, SD prices are unrealistic especially considering the median income.

In Boston, it was reported that the med/pharm/bioresearch sector was losing out on the "best" qualified professionals since the cost of living...housing...was too high. The quality of life is not outstanding here, other than it being a mecca of higher education. That equals a lot of desperate students everywhere...and even resident docs and fellows don't make that much $.

The BIG DIG: BIG DIG has been a money drain...From what I have seen on both coasts...Caltrans does a superb job compared to the engineers who planned the Boston roads. Maybe some of the CA engineers should be recruited to come to MA. By now, most people would have heard about the woman who was killed when her car was smashed while driving thru the brand new tunnel ....hit by a falling concrete panel. That and the subsequent repair costs--all caused by glaring engineering flaws --bolts that were too weak to hold the concrete up.
Add to that $$$$$$$$$$$$$$ there are tolls to pay for the roads and bridges coming in and out of Boston...and on the MASSPIKE which is like being charged to use I-5 or I-8.

Housing & Income: I make more $ in New England....rent is slightly cheaper, but heating an average winter is $200 a month for forced air...about 5-6 months for a small 500 sq. ft apt.
Commuting: I could find something in the Greater Boston area on public transportation (ie subway or rail) that I could afford, which is a plus. For example, I live about 25 miles outside of Boston and my rail commute is 30 minutes on the train..I drive to the train 10 minutes...
That commute in the morning by car would be minimum 45 minutes and parking would cost at least $100. 8 Months out of the year you can expect bad weather -add to that old conjested freeways... Public transportation with subways and rails is excellent for commuting. and even though we have a subway and commuter rail (which cost anywhere from $65 -$150 per month)

Some city leaders in San Diego want a "big cover up." They want to cover the 5 freeway downtown and build a park on top (similar to the big dig) then connect it to Balboa park to create a park-to-bay area. Sounds grand but who's gonna pay?

PC, seriously?

Very seriously. Planners have been talking about it for a while now. Some condo developments use this Bay-To-Park dream as a selling point!

Not only that, the City will be diverting $1 out of $7 of the upcoming water/sewer increase to pay for the pension deficit. And here we thought that all that money was needed for pipe repairs.

The city of SD is broke but we have grand dreams.

No one I know in SD has ever told me about a project for park to bay area. I'll have to find out more.

No_Such_Reality,
check your figures. Look at the link here (http://blogs.ocregister.com/lansner/arch...) in Lansner's blog for the recent Bureau of Labor Statistics avg weekly wages.

Summary:
SD County: $850, $44K/yr
Santa Clara County: $1386, $72K/yr
OC: $916, $47K/yr
NY County: $1453, $75K/yr
Suffolk MA (Boston): $1228, $64K/yr
SF County: $1231, $64K/yr

Based on these figures, the avg SD wage earner is a service sector employee, likely lacking a 4 yr degree. Concerning affordability, one can see that the resident of NY, BOS, SF, or San Jose make significantly more $$$ and dedicate less of it to housing than in SD or OC. In the 4 years since I moved to New England from SoCal (LA native), I've doubled my salary, largely due to the incredibly hot job market here for skilled professionals. The weather may suck, but if you want to make serious money working for large banks or corporations, NY, BOS, SF and SJC are really the only places where you can do it. You can lump in Northern VA too but the summer weather there is so bad I'll leave it off the list.