San Diego Housing Bubble News and Analysis

I sold a house in Poway to a young engineer, in March of 2004. Coincidentally, the house was at the combined median for the time as stated by your article. The sentiment associated with buying that house now vs.then, considering a family with the exact same means doing the same thing is so incredibly different. I did BTW, warn them several times that they could easily find themeselves upside down including beyond their 20% down and they should consider a scenario with at least six months without income. They were really sober about the deal but there was no real fear like there is now.
What all this makes me wonder, is... when will that soberness come back? So, I will stop there and ponder the question.

Rustico,
I think it is pretty amazing you were advising people way back in March 2004 about the possibility of a large drop in the market! I would think people would be hard-pressed to name other realtors that were giving that kind of warning/advice back then, as most were still caught up in the frenzy. Even today, all the realtors knocking on my door are still spouting blue-sky scenarios. I only know of one other Realtor (besides yourself) who was saying simlar things back in 2004 (SD Realtor, I wouldn't be surprised if you were too). That was also about the time I stopped doing flips/rehabs as I began to fear what may have been coming down the road.

BTW, a good indicator of the state of the market is how many realtors are walking the streets knocking on people's doors. In the last few weeks I've had at least two each week. Hey, I think I found a new market indicator! Let's graph it! ;-)

For those of you who don't get the actual "meat space" newspaper, you missed the massive headline and article, taking up about 3/4 of the upper fold of the front page.
Its the kind of treatment usually given to things like announcements of middle east peace or Chargers clinching division titles.

It dispels my concerns that the UT would bury this stuff to protect their realtor advertisers. And the local TV news folks basically just read the U-T to figure out what they should cover, so expect this story to get big play tonight.

For someone like me waiting to buy, seeing this headline was an early Christmas present. Hopefully, Joe Seller will stop thinking his house is worth what his idiot neighbor paid in 2006 and finally start pricing based on today's reality.

New-renter,
I have always felt that there were two bubbles. The first normal one and the second a fluke based on the easy financing. So I started getting really concerned In 2003.

"That was also about the time I stopped doing flips/rehabs as I began to fear what may have been coming down the road."
Good for you too. You couldn't have timed it better.

For those of you who don't get the actual "meat space" newspaper, you missed the massive headline and article, taking up about 3/4 of the upper fold of the front page.
Its the kind of treatment usually given to things like announcements of middle east peace or Chargers clinching division titles.

Saw it this morning in Starbucks ... wow! BoF is not exaggerating here, folks.

Mmmmm, I thought it was about time to take a little walk to pickup a coffee & one of those tasty maple bar gut bombs! I only get the paper Thurs.-Sun. Definitely going to buy today's edition for posterity!

For those of you who want to see the Union Trib front page but don't want to go buy a paper, you can see the PDF here

http://subscribers.uniontrib.com/daily.pdf

And, yeah that is pretty amazing how much coverage they gave it on the front page.

I look through the comments sometimes, to amuse/sadden myself, and I just had to point out this one:

The housing price boom was simply a matter of the nation discovering how great san diego is. And it all got started way back when we hosted the first superbowl. After that people began to pour into this city, creating a housing shortage. MTV filmed spring break here. More and more national attention was here. Housing prices will never drop 50%, people still want to live in this city...so there will always be a market for houses.

That's right: all those rich people (with plenty of money to burn on houses) had never heard of San Diego until it was on MTV's Real World. I guess that Real World must have proceeded up and down the East and West coasts, and into Vegas and Phoenix, and sparked housing bubbles in all those cities too.

Worst bubble rationalization ever.

Rich

Hilarious Rich. If that's what caused the boom, what's causing the bust?

edit: I hope I can be forgiven for initially confusing Spring Break with Real World. Spring Break obviously has a far greater impact on the US economy and migration patterns.

Nostradamus, I'm not sure what could be causing the bust... maybe it's because Silk Stalkings got cancelled.

Rich

Phoenix is hosting the 2008 Super Bowl, so we should quickly invest there before other people discover it!

Rus,
Dont you think its bad form to heckle your past clients?

It wasn't only Silk Stockings. Obviously the Knight Rider remake that was to be filmed in San Diego had a tremendous impact on the local housing industry as well:

Wildfires Take Toll on Locations for New ‘Knight Rider’

"Then, just when it appeared that the next best thing, the pilot and 22 episodes of NBC-TV’s “Knight Rider,” a remake of the popular series that ran between 1982 and 1986, was ready to start shooting, the firestorm that swept through the county in late October took a toll on most of the locations where the show was to be filmed, according to Cathy Anderson, president and chief executive officer of the San Diego Film Commission."

http://www.sdbj.com/industry_article.asp....
1552005.1977631.59545402.631&aID2=119376

You guys are forgetting the impact of the insurance cavemen series being "relocated" from Atlanta to San Diego this fall. Did it make it past two episodes?

What sort of effect this front page news will have on the local market? Is this a "Wily Coyote looks down" moment for a great number of San Diego homeowners?

It should be.

Whoever wrote below watches too much Beavis and Butt-head.

>>>The housing price boom was simply a matter of the nation discovering how great san diego is. And it all got started way back when we hosted the first superbowl. After that people began to pour into this city, creating a housing shortage. MTV filmed spring break here. More and more national attention was here. Housing prices will never drop 50%, people still want to live in this city...so there will always be a market for houses.

I saw that comment earlier today. I came this close to posting a retort to that one. Then there was the moron who was telling people that if they only bought AAA rated properties they'd be okay and that his 2003 purchased AAA property hadn't lost anything yet. Talk about clueless. What's he going to tell people next year when the pricing skips the 2003 levels and goes straight to 2002 levels?

There really are people who think the weather (and the Superbowl) will support this price structure all by itself.

BTW, I got to use the term "e-balling" (a phrase I learnt here) in conversation last week. I was teaching a CE course for appraisers on Saturday and was ranting about some of the trash-talking bulls who pontificate on the comments boards at signonsandiego.com. As it turns out, that phrase was too hip for the room - I had to explain it.

This front page article is a seminal moment.

I will file it with the June 2005 Money Magazine I picked up at the airport and have since laid on my shelf open to page 78.
http://money.cnn.com/2005/05/19/real_est...

What a contrast :

Boom Town to Bust Town

the graph and headline suggest one thing to me: it's a great time to buy.

if the graph had shown prices from say, 1997, then i'd think, oh, i can sit back and wait. but since the graph is nice and symmetrical and makes me think that prices have not only fallen a significant amount, but that it's reached some kind of "starting point", returned to "normalcy", i'm all pumped up to go out and buy myself a bargain.

Hey FSD are stockpiling articles? Do you have alot of boom stuff from the early 2000's etc? as well as subsequent bust stuff?

SD Realtor

Interesting point drunkle. I have been wondering all day, "who gave the press the green light"?. If I am jaded they did it to me.

heh, talk about jaded, there is no way in hell i'd give the tribute any credit for printing anything truthful, unbiased and non manipulating... i'd be suspicious of the sky if they printed that the sky was blue.

Maybe my Timing the Bottom thread was well timed after all?

Is that really the front page of yesterday's paper? I live out of state now, otherwise I would have gone out and bought one! Any chance of getting a scan of page one only with the text readable?

This may sound a bit cheezy, but after reading this UT article, I want to send out a special thank you to those of you on this blog - and especially Rich - for convincing me to sell my North County home that I could not afford back in early 2006. Your insight and analysis brought me to the realization that the market would likely fall, and that even though I was breaking even financially each month and able to make my 7-yr IO loan pmt., this was a risky way to live and I was putting my family's finances in jeopardy. You also helped bring me to the realization that my home equity was my biggest asset, not to be treated like Monopoly money, and I realized how long it would take us to save an equal amount of money given our incomes and rate of savings - 40 years. We cashed out and moved east last year, and that equity is now sitting in the bank earning interest. To be more specific, I want to thank you because based on current prices, had I kept the house, I would be underwater in an IO loan I could not afford and would have lost all of equity. Instead, I am debt free, have two cars that I bought with cash, have fully funded my 401k, set up 529 plans for my children, have a significant cusion of savings and am considering starting my own business. Ironically, I have never met any of you, but I have you to thank for the most significant financial advice I have ever received, and for saving my family from financial ruin. Everyone else, including family, encouraged us to keep the house, and showered us with guilt for leaving, and your's was the only voice of reason throughout the past couple of years!

Cheers! That's a great story. May the New Year be even better for you and yours.

Great post Juice. So many chastise these blogs for being doom and gloom. Your story highlights the real value of these sites. Many highly intelligent people in the RE establishment have literally been disgraced as this debacle unfolds. The objective of this site and others like it is becoming more clear, they are here to PROTECT people from making a grave life altering financial decision. That is as positive as it gets in my book.

Hey FSD are stockpiling articles? Do you have alot of boom stuff from the early 2000's etc? as well as subsequent bust stuff?
I'm not really stockpiling anything. Although I have the actual Money Mag on my shelf, the images above were taken off the web. I just saved the Money Magazine from June 2005 because it was just such a pure example of speculative mania.

One of the best resources for Previous Bust and the following Boom is DQnews.com - You can peruse these and click on different press release for 1995 to 2006:

1995 example
http://www.dqnews.com/AA1995OFA06.shtm