San Diego Housing Bubble News and Analysis

The interesting part is. We're only in round 2 of this economic meltdown too.....

Me thinks its gonna be kinda hard to qualify for those full doc, 20% down loans when one is unemployed.

Oh well, such is life...Not a big deal....

SDR, it seems like you're doing the right thing. You have multiple streams of income..... I wish I had started this much earlier when the times were still good.

BTW: i still owe you an email, because I got a lot of questions... Sorry, I've been swamped, and I dont' want to sound like a (complete) idiot and waste all your time on some loosely written set of questions. But, lately, my salary has been cut in half, considering all the additional responsibility I need to assume for all the work other people use to do, if you know what I mean.

For some time now, I have been concerned that economics of the country were far graver than what I had imagined. That is definitely now the case. There is the usual anecdotal evidence that can be tainted by ones desires but, there is also an ever increasing pool of evidence that points in that direction as well. The number of layoffs announced on a daily basis continues to rise, and it seems as corporate bankruptcy/restructuring seems to be making its way to MSM more regularly.

There are small group of people that I know that regularly question when I'll get serious about purchasing a house. My reply has been for quite some time has been that I would not as long as such a purchase would mean neglecting other aspects of my life; saving, funding retirement, recreational activities, you know participating in life without living in debt. That response was always met with a look of perplexicity, disgust, or that "man this kid is an idiot" look. It's all pretty much the same look so it can be very hard to tell which is being displayed.

Now that prices have fallen and the perceived affordability has increased, I still get the same question by a smaller group and I reply with the same answer. The looks now include what I described above with the addition of great concern, despair, and outright fear. I've had a few tell me that I've made a well thought out choice....A few! The remainder can be broken down into two groups, those with there heads buried in the sand and those that understand the problem but, don't want to even mention it. As though speaking of the problem would make it worse.

I think the previous generation is starting to realize that they have squandered their futures along with our own. The talk of retirement seems to be increasingly the talk of delayed retirement.

The next decade is going to be a decade of tough choices. The pool of jobs is going to be far smaller than the bodies seeking them.

I do feel a sense of vindication. All that time questioning myself, "Am I doing something wrong". Being the odd ball pointing out the flaws in the system and being ridiculed for it. Having to defend my right to live as debt free as possible.

I do believe that some of those caught up in the game are deserving of the results. I am unapologetic about that. However, there are a good many of us that are also caught in the trap that didn't leverage themselves silly.

As this tide is going out, we're finding out just about everyone was not wearing a bathing suit. If one is heavily in cash, the world is starting to look very cheap, but getting cheaper. This was the only historically accurate reaction to a huge and very unsustainable growth in debt. There's no way we could have kept on the path we were on. So now, we begin the correction to sustainability, but with an over correction...as is usual. I've been saying this on this site for the last 8 months. While everyone was salivating about rent vs. own cost being equal and cost vs income ratios getting lower. I'll say it one more time for those that did not seem to believe what I wrote was true. Unemployment will devistate CA real estate. It always has and will. We're about to get a massive dose of unemployment that's going to make everyone recalibrate their financial world.

Maybe living as if you will always have a job is the new irresponsible?

Bring it on! Fact is: job security is still more about psychological fear than about the real job safety. Even in depression, the number of people who have a job still outnumbers the number of people who don't by a wide margin. Also, even if I got laid off tomorrow, with all the severance package and unemployment benefits, I still feel richer than any time I was in the bubble years. I was "priced out forever" in those years, but now even with layoff, I still have a chance to buy a small condo to live in with all cash.

The safe jobs are, generally speaking, in government. All levels, state, local, federal, military, are virtually immune to the tribulations the private sector employees are about to go through. During the Great Depression, government employees were the lucky ones.
Let's not hear any more whining by public employee unions about their relative misfortune.

Employment is not a birth right. This will become more painfully obvious in 2009. For the people that stayed careful and did not over extend themselves, this is your time. I still remember that the last RE dump started in 1990 and by 1995 you could get great deals. This contraction is looking way worse. So I'd say if this started around 2006, then by 2011, there will be very good deals to be had. Buy all cash and be done with it. Of course, there's always the state of CA to screw you with taxes. That's the big unknown going forward. IMO

The safe jobs are, generally speaking, in government. All levels, state, local, federal, military, are virtually immune to the tribulations the private sector employees are about to go through.

I work for the UC system; largely because I anticipated this economic meltdown a few years ago and wanted to get locked into something stable (with good benefits) until it was over.

Well, we just got word that in addition to having a salary freeze this year, we got hit with an additional mid-cycle budget cut. To top it off our pension fund is down almost 25% and we are looking at having to begin contributions again next year.

And, as FLUW mentioned, we are only in round two of this thing.

At this point I don't think any job is *safe* and would not be surprised at all if we had lay-offs (though I feel my position is safe).

Funny enough, I still get a few pings a month from recruiters, so there is some evidence that there will always be jobs out there for good people.

Thinking one is safe from unemployment because of working for the govt is dangerous at this time. This aint your dads recession. More like Grandpa's depression. But tolerance from the masses is not part of the world anymore. People take action these days and if they see taxes rising and people in govt with jobs when they cant get work, there will be a price to pay for this.

Bring it on!

I'm with peterb on this. We are on the way to sustainability with an overcorrection.

The problem is that people were living and counting on bubble income.

In the long run, we'll be the better for the correction.

Is that theCA state unemployment benefit? Is it the same thing that is drawing funds from a deeply red budgeted item in CA?? Really? You still counting on this???? Also, what makes you think you're severance package will be more than say 2 months?

As a techie...You can always find employment if you're current and hands on...It's a question of how much underemployment you are willing to take. For example, if you have 10+ years of *current* and don't mind working for the same price as your college grad, well you won't have a problem with finding another gig...

Similar to the concept of homes will always sell in any market...It depends on what price...

I do feel for those folks with 15 years of experience but since then have moved out of a technical/hands on role....You can always underemployee yourself if you can still build stuff. But it's sort of difficult to underemployee yourself if you are no longer hands on.

Back in good times, there was a lot of fluff positions. It's going to be a lot tighter these days, where a lot of those managerial roles i think getting consolidated.

I agree w/EconProf. All government employees are safe, particularly police and fire.

I like reading FLU's analysis. Keeps it real. Thanks.

SD Realtor, you seem to be blaming the messengers.

People who predicted this crisis just looked at fundamentals and determined that our economic model was out of whack.

The recession is not something that could be wished away.

It would have been better for the Pollyannas to plan for the future rather than cast aspersions on those who foresaw the worst.

The layoffs at Amylin are the beginning of tech in San Diego being devastated. Cash flow negative companies, of which there are plenty in San Diego, won't make it. Investors were buying companies, like houses, with the anticipation of appreciation. Take away appreciation and the capital dries up.

Even if a company's technology is good, why fund the negative cash flows and overhead when you can eventually buy the technology at fire sale?

Microsoft is no longer buying Yahoo! for a reason. I'm betting that Microsoft will end up with Yahoo! at a very steep discount in the depth of the recession.

The neighborhoods where professionals live will see major declines like the rest of San Diego.

SD Realtor, are you still submitting low-ball offers?

As a contractor with clients spanning multiple sectors, I haven't felt the slowdown yet, but I have this deep gnawing sensation that many of my clients will be looking to cut back over the next year. Even my diversification doesn't help me sleep at night.

Then again, many of my clients are in creative/artistic fields, and some believe that creativity and artistry flourishes in bad economic times, so I'm not really sure what to think at this point.

Job security was in decline a long time before this recession. At least 15 years ago one could look at the job market and understand that. Living UNDER one's means seemed like a requirement since then.A little period of (credit driven)prosperity didn't fundamentally change anything but probably a lot of people thought it did.

The frequent pronouncement, a decade or so ago, that the U.S. was becoming to a greater and greater extent, a service economy,sent up red flags too.I remember hearing on the radio,can't remember who the speaker was, but he said with what seemed like great pride, "We are now a service economy" I said WTF? Although I work in that sector,and I don't want to do otherwise, Those claims didn't have the sound of sustainability. I am not saying that I am an authority on this. Maybe my layman's views are completely messed up? It seems like there were plenty of reason to be cautious.Service economy, plus credit boom, seemed like a bad combination.

Yup. That one hits a wee bit close to home. Needless to say, my coworkers don't wanna believe me.

Recessions and depressions are really not that much fun no matter how much we all want housing to go down.

Nor was 2000-2003 when techies had it really bad. Remember, that housing doubled and tripled in price. So at the same time my career field was eviscerated (something I saw coming) the fundamentals of life got much more expensive.

So now on the back side, which I also saw coming, I'm supposed to be chastened? What gives? Your post is almost some weird ad hominem attack against those of us swept up by macro forces who've tried to make sense and prepare for the inevitable.

Recessions can be fun, but not if YOU lose your job. Last one I did and watched others keep on partying. Nobody shed anything but crocodile tears for the tech industry. Even in good times its no fun to watch others lose their livelihoods, but its far worse having been punished unreasonably for doing the right thing; you know saving and living within your means.

Josh

Silly SDR, we only don't care what happens to everyone else - as long as it doesn't affect me I don't care what they do!

/cynicism

Maybe people will start to realize what other people do does matter whether they think it affects them or not.

HA!! HA!! The art might flourish, but nobody will buy it. I work in theater, and if there is even a hint of a slowdown, we see our ticket sales drop considerably.

Art is the first thing to go. The only areas that do better in a slowdown are the repo business, booze, and cigarettes.

I heard on the radio a few days ago that the biggest Italian car dealer in the USA closed-up shop. They were in OC and I think it was a Lamborgini shop. The super wealthy can weather just about any storm and not change their life style one iota. But there are about 10,000 of them in the US. So unless they are a client for whatever you happen to provide, you're probably not outta the woods. Too bad they dont all live in the same town.

SDR,

There are people who lived off the economic boom triggered by mortgage debt who we all despise, and there are people who we like, but who deserved a reminder that there is no free lunch, and then there are people who are "innocent bystanders" we feel sorry for.

I tend to think there are hundreds of millions in the first two categories, and a few hundred thousand in the third. In the NY Times Sunday, there was an article about the NYT charity helping people who bought houses they could not afford. I was outraged. The people they featured in the story were getting more help than I have ever received, even though they had spent more than I have ever spent.

So I have some room for empathy, but not a lot. Bring it on. We need to redirect economic activity away from housing and other consumption toward producing things that people in other countries want to pay us good money for.

It's not that simple. Dealerships survive on open credit to take on inventory. Some dealerships are getting squeezed by the credit crunch. And yes, it was the Lambo dealer in OC. Hence, why we're going to see a lot more dealers go under or close shop.

Did you not hear about the U.S. Postal Service plan to lay off 40,000 people?

http://www.ksla.com/Global/story.asp?S=9...

I have a feeling that this is going to get really bad. If we're lucky, maybe we'll experience something like the Great Depression of 1929 as opposed to the Panic of 1873.

http://chronicle.com/temp/reprint.php?id...

As a realtor, I guarantee you've played a much bigger part in bringing about this disaster than some random cheerleader on a message board. How do you sleep at night?

Luckily there will always be jobs for Dyn-o-mite salesfolk.

It wouldn't surprise me if Microsoft just decided to wait until Yahoo! declares bankruptcy and then just buy the parts they want.

Buy 'em out boys!

The comment is uncalled for. We still need good realtor for our real estate transaction. Providing a good service and get paid for it is what a good businessman do. Why resulting to insult in a good discussion.

LOL...I knew yourwere in sales... It had your m.o. written all over.

*Typical over-confident personality, that feels invincible (until you miss your quarter)
* Takes the most sour lemon cake and markets it as the best tasting, sweetest cake their is.
* Then there's the high pressure, "you're an idiot if you don't agree to buy this thing" tactic...
* And the entire "build versus buy, build versus buy".

Pss, bad economy = economic climate you won't be able control, irrespective of your sales numbers. If you're anywhere near as confident in your stability as you were you your market predictions, good luck man...