San Diego Housing Bubble News and Analysis

I know nothing.

I hope gold hasn't peaked.

Hope is not a plan exactly.

Better than 2009

hope the following clarify that concern:

Tiger Woods won't cheat on his wife again. I am certain of this. I just bought a new Magic 8 Ball and every time I ask it a question it says "Yes we Can." I am starting to get a little nervous!

My forecast is for a whole lot of nothing.

Interest rates and exchange rates will remain more or less the same throughout the year. The Fed will not rise the rate before the end of 2010. Nevertheless, there won't be any significant inflation (no more than 4% YoY as measured by CPI).

Nationwide unemployment rate will decline somewhat and end the year between 8% and 9%.

Oil prices will be more or less flat and end the year between 60/barrel and 100/barrel.

Gold will enter a period of steady decline and end the year between $800 and $1000 per ounce.

Stock market will be somewhat bullish, but Dow will not surpass 14,000.

The healthcare bill will pass and anyone who tries to campaign on the possibility to repeal the healthcare reform will be soundly beaten. Nevertheless, Democrats' advantage in the Senate will shrink from 60 seats to 55, give or take. Lieberman will be booted out of the Senate.

San Diego house prices will be flat in the lower tiers. There will be a mild rebound during spring months but not enough to bring lower-tier HPI above 180. Top tier will remain weak.

There's a 50:50 chance that I'll give up on San Diego's perfect climate and accept a job as a quant at Goldman-Sachs.

I'll agree to disagree. Unemployment will stay high, as soon as the 10 year treasury rate passes 4% people will start fearing inflation is coming. Stocks will drop to 8,000 and hoover there for a while. Gold, don't own it so don't care. Healthcare, although I want reform I am tenuous as to the ability of the current administration to carry it out as I don't believe they fully understand all the nuances involved. The dollar will fall as we still aren't producing as a country like we should be. California will still be filled with beautiful properties and beautiful people, hence everyone will want to live here. Hopefully everyone I know will still have their job. In general we will continue our current status.

Housing : I agree with Eugene... Lower end will be stable, mid/upper end will show weakness. Volumes might increase IFF inventory opens a bit.

Job : The overall employment numbers will show improvement. Meaning unemployed people will find jobs. However, this will be countered by the income numbers showing a decline. People will be willing to take much lower paying jobs when their benefits and savings run out. Former high wage earners will learn to tighten their belts, change careers, etc.

Gold : The bubble will continue to inflate for the first half, then start to deflate in the second half.

Strength of US $ : No clue but I'm hoping it gets stronger than currently. (It's not that strong right now, IMO). I'd love to see the exchange rate against the Euro improve since I want to go visit distant family this summer.

I think the high end housing could turn down without too much effect on the local economy, but if the mid range or lower range housing takes another significant down turn, it will get real ugly out there fast.

Just my opinion of course.

I havent thought about pricing enough but I will share one thing. Inventory will continue to be very constricted and quality properties will be hotly contested up to the mid 800's. Over that its a tough market but below that I wouldnt expect any screaming deals unless you are very opportunistic and/or create your own. Buying on the court house steps will continue to be an investors game and more big players will enter that venue if they havent already.

Let me put my forecasting cap one :

- houses will sell
- the $ will fluctuate
- gold will remain shiny
- unemployment slightly up
- shadow inventory the same
- Govt intervention - priceless & useless

that gold chart looks a lot different and less bubbly in inflation adjusted dollars.

That may be - but if you look at a stock chart - they don't adjust for inflation. It's pretty standard to just show the price in non-inflation adjusted terms.

NEWS!!!

My Company actually did a new hire today !!!

This was a real new hire, not a replacement hire.

I am surprised someone in HR knew where all the correct forms were.

It’s been over two years now.

My prediction:
Prices (as measured in dollars) will be up ...
This includes housing.

Was it a downsizing consultant?

Also what industry?

1. Faber: The 'American Empire' has peaked, is on a decline

Hong Kong economist Marc Faber says "the average life span of the world's greatest civilizations has been 200 years ... Once a society becomes successful it becomes arrogant, righteous, overconfident, corrupt, and decadent ... overspends ... costly wars ... wealth inequity and social tensions increase; and society enters a secular decline."

2. Grantham: Learned nothing, doomed to repeat past, only bigger

Money manager Jeremy Grantham warns that our irrational nightmare will repeat. A year ago we came dangerously close to the "Great Depression 2." Unfortunately, we've "learned nothing ... condemning ourselves to another serious financial crisis in the not too-distant future."

We had our bear-market rally. Next, historical cycles plus our irrational behavior guarantees another, bigger global meltdown. We "learned nothing."

3. Stiglitz: Wall Street creating short respite before next crash

Nobel economist Joseph Stiglitz recently warned: Unless Wall Street's incentive system is drastically reformed, "the financial sector will only try to circumvent whatever new regulations we put in place. We will simply have a short respite before the next crisis." Warning, nothing's changed, it's worse: Lobbyists run Obama, Congress and the Fed.

4. Johnson: Running out of time before Great Depression 2

Yes, "we're running out of time ... to prevent a true depression," warns former IMF chief economist Simon Johnson. The "financial industry has effectively captured our government" and is "blocking essential reform," and unless we break Wall Street's "stranglehold" we will be unable prevent the Great Depression 2.

5. Ferguson: Fed's easy money fuels new bubbles, meltdowns

In the 400-year history of the stock market "there has been a long succession of financial bubbles," says financial historian Niall Ferguson. Who's the culprit? The Fed: "Without easy credit creation a true bubble cannot occur. That is why so many bubbles have their origins in the sins of omission and commission of central banks."

Another bubble (and crash) is virtually certain, thanks to Washington's $23.7 trillion explosion in debt, the Fed's support for the $670 trillion shadow banking system and Wall Street lobbyists getting superrich thanks to Wall Street's insatiable greed.

6. Taleb: Fed haunted by ghost of Greenspan's failed Reaganomics

When Obama reappointed Bernanke, Nassim Taleb, risk-management professor and author of "The Black Swan," warned of a new disaster: "The world has never, never been as fragile," yet Obama reappoints an economist who "doesn't even know he doesn't understand how things work." New proof? At last week's American Economic Association, Bernanke was still shifting the blame: "The best response to the housing bubble would have been regulatory, not monetary."

Wrong: He conveniently forgets he was advising Bush earlier, did nothing. Now Obama's stuck with a Greenspan clone and an insane ideology focused solely on saving a failed banking system by flooding the world with inflated dollars guaranteed to trigger another meltdown.

7. Soros: Dollar dead as a reserve currency, nest eggs dying

Billionaire investor George Soros' "New Paradigm:" America's 25-year "superboom ... led to massive deregulation ... blindly chasing free markets ... unleashed excessive greed ... created the dot-com and credit meltdowns" and a "shadow banking system" of derivatives.

"The system is broken. The current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency," warns Soros. "We're now in a period of wealth destruction. It is going to be very hard to preserve your wealth in these circumstances."

8. Hedgers: make billions shorting stupid politicians, bankers

Soros isn't alone. Lots of hedge fund buddies made hundreds of millions and billions betting on the stupidity of Washington with the Fed's cheap-money policies. Alpha magazine reports that four hedgers made more than $1 billion each in 2008. The top-25 "managers made $464 million each on average last year ... a kingly sum, especially during a year of global recession, stock market wipeouts and vanishing wealth."

9. Shiller: Dot-com, subprime meltdowns, 'third episode' next

Economist Robert Shiller a "Dr. Doom?" Remember a decade ago with "Irrational Exuberance?" Now he's warning: "Bubbles are primarily social phenomena. Until we understand and address the psychology that fuels them, they're going to keep forming. We recently lived through two epidemics of excessive financial optimism, we are close to a third episode, only this one will spread irrational pessimism and distrust -- not exuberance."

10. Kaufman: Irrationality replaced reason, science, technology

Henry Kaufman was Salomon's chief economist and "Dr. Doom" for 24 years: "Why are we so poor at managing our key economic institutions while at the same time so accomplished in medicine, engineering and telecommunications? Why can we land men on the moon with pinpoint accuracy, yet fail to steer our economy away from the rocks? Why do our computers work so well, except when we use them to manage derivatives and hedge funds?"

Kaufman warns: "The computations were correct, but far too often the conclusions drawn from them were not." Why? Selfish, myopic politicians and bankers.

11. Biggs: Sell everything, buy guns, food, head for the hills

In his 2008 bestseller "Wealth, War and Wisdom" former Morgan Stanley research guru Barton Biggs warns us to prepare for a "breakdown of civilization ... Your safe haven must be self-sufficient and capable of growing some kind of food ... It should be well-stocked with seed, fertilizer, canned food, wine, medicine, clothes, etc ... A few rounds over the approaching brigands' heads would probably be a compelling persuader that there are easier farms to pillage." Biggs sounds like an anarchist militiaman.

12.Jared Diamond: Nations ignore obvious till it's too late, then collapse

The end will be swift. In our age of short-term consumerism and instant gratification, few hear the warnings of our favorite evolutionary biologist, Jared Diamond. Societies fail because they're unprepared and will be in denial till it's too late: "Civilizations share a sharp curve of decline. Indeed, a society's demise may begin only a decade or two after it reaches its peak population, wealth and power."

13 Ilargi from TAE

And they only need to do it for as long as it takes to move all gambling debt magically off the books of the players and onto the national public balance sheet. Then when the loot has been loaded into the get-away planes, trains and automobiles, they will get the hell out of Dodge and slip away like so many thieves in the night as literally as they can. Après ça, le deluge.

14 James Knustler

Welcome to the Futility Economy. This is the economy where Nature and its material companion, Reality, punish us for our stupidity and fecklessness. This is the economy that will tear the United States apart, after it bankrupts us at every level, and mercilessly drives the population down by one-third through starvation, homelessness, violence, disease, and sheer political cruelty.

Whatever you thought our economy was the past thirty years -- whatever model of it you have in your head -- that is definitely not what we are going back to. Like one of Dickens's Yuletide ghosts, Reality is leading us by the hand into new circumstances. We resist like crazy. We throw our hands over our eyes. We don't want to look. We want to return to the comfort of our dreary routines -- living in places that aren't worth caring about, weaving endlessly in freeway traffic, drawing a paycheck at the air-conditioned cubicle, inhaling Buffalo wings by the platterful, with periodic side-trips to the state-chartered casino where there's always a chance of scoring a lifetime's income on one lucky bet. And at the end of the day, you can retire with a simulated prostitute on your laptop screen! And not even have to fork over a dime -- except perhaps for the Internet connection fee.

It was a Hardware engineer (electronics).

Communications test equipment mfg.

We also blew the doors off our projected numbers last quarter.

OK
I have to respond,

I think that after a quarter or two of growth, things will start to snowball with new demand being created from new household formation that has been put on hold for the past three years (how many 45/50 somethings do you know who have their kids and grand kids living at home ???).

In 2007 I think it was we had the largest baby boom in U.S. history !!

That my prediction.

Arraya - Intersting array of quotes.

But, I got stuck on #5

In the 400-year history of the stock market "there has been a long succession of financial bubbles," says financial historian Niall Ferguson. Who's the culprit? The Fed

I didn;t even realize that the Fed had been around for 400 years creating all these bubbles.

An alternative conclusion might include that there are components of human nature that drive these bubbles.

Just heard about another New Hire in (but in the New Jersey office) Dang !! that's two in a week!!

I think I would have to go back to 2005 or 6 to see when we last did that.
OK I will shut up now,

GS: Google Phone = Qualcomm Boon

http://blogs.wsj.com/marketbeat/2010/01/...

Also talk of Qcom starting it's own TV over cell phone Biz.

2010 is probably the hardest year to predict since I've been coming to PIggington.

2009 showed us that government intervention can have a huge effect on the stock market and housing market, especially in the short run.

As of January 2010 I feel that Housing, the Stock Market, and Gold are all slightly overvalued. However, none are so far inflated that government intervention in the form of printing money or targeted incentives can't prop up any or all of them.

San Diego's housing market isn't exactly affordable, but I've seen houses in the neighborhood I live (92116) selling at prices that shock me. 2010 could easily be a flat year for real estate with seasonal fluctuations.

The overall economy will continue recovering with job growth emerging sometime between June and December. Politically the Democrats have a lot of incentive to try to accelerate that growth, while the Republicans hav ea lot of incentive to stall and stagnate. Recovery is coming, but the timing by a few months could have a huge impact on the election cycle.

My take on 2010 is - a whole lotta nuthin'.
Or, maybe "the calm before the storm."

My heart tells me things are really going to head south in 2010, but my head knows that things always take longer than my heart expects. Or, maybe it's my head that thinks things will head south in 2010 and my heart that says it won't. Not sure.

(You should add "Stock Market:" and "Retail/Christmas Shopping:" to the list, by the way.)

All will appear normal in 2010 but potential credit stress, light consumer demand, and reductions in government support will quietly threaten the economy throughout the year and possibly start to affect the economy as the year closes.

I expect a "normal" year for SD housing. Prices down a little in Q1, up a bit in the Spring, and back down in Q4 with year-over-year deltas each month ranging from -5% to up 5%.

Carmel Valley 900K SFRs will not "break" this year. Maybe next or even 2012.

Unemployment will be the frustration factor for the year and will be the indicator that not all is right. Stimulation can create "make work" jobs but can't really fuel the real demand growth that is needed to keep people working long-term. Unemployment down a perrcentage point his year. Maybe two.

In March of 2009, I thought we would have a stock market crash in Oct 2009. By August, I decided it wouldn't happen. Too obvious. In Aug. 2009, I figured it could come after Q4 financial reports - in Feb 2010. By Nov. 2009, I decided Q1 was again too early. I'm back to a potential bear market return in Oct of 2010. May not happen until early 2011, though. Just going to take some time to shake investor belief in the recovery.

Of IRA money I invest for myself, I took all cash out of stocks in Sept. 2008 and haven't put it back in yet. I probably won't do so for another year at least.

I'm not sure what to think about Oil or Gold. I participate in Tim Iacono's "Gold and Oil" prediction contest occasionally and I suck at it. As I have mentioned before, I think Gold will take a hit when the stock market takes a hit, then recover quickly (after a month or two) while the stock market continues to drop. The timing of the stock market hit is the hard part. Could be this year. Could be 2 or 3 years away. To support my "whole lotta nuthin" prediction, I'll say gold is down just a bit - 5% or so for 2010, poised to first drop to 850, then head past 1200 in 2011.

Oil ? I'll say what I always say when I have no idea - Oil will be flat.

Christmas season will be solid. Maybe up a bit from Dec. 2009.

The US $ will stay the universal currency for a long time and may come up in 2010 - I'll say up 5% relative to other currencies. Yes, it is a fiat currency, but so is everything else, and everyone else has similar, or bigger issues than the US, including the Euro. I don't see the crash of the dollar preceeding the crash of any other currency.

I also predict that local governments will be near the breaking point by the end of the year. Bankrupcy will be the "in" policy for local government and it will wreak havoc on unions, wages and employment, setting the stage for a rough 2011. Of course, timing on that could be a couple years early. I'd like to precict that at least one state will go bankrupt, but I think the Feds would save them.

At the start of 2011, we will be poised for a bad year to come, and possibly be at the start of a new recession.

It seems that this recession has not caught up to the "high end." Those who had money before the recession rode it out and made it through fairly unscathed. The same cannot be said for the next one. It is going to rip into the bank accounts of business owners, professionals, and mid-to-upper management more viciously.

This is all based on my usual rigorous "analysis" which is done entirely in my head as I type :|

Interesting note on recent national rent decreases and a call for more in the next 6 months.

http://www.calculatedriskblog.com/2010/0...

That'll start to take a toll on housing in late 2010 or 2011.

Personally I think San Diego real estate may decline again, dragged down by commercial real estate unless the government continues to aggressively intervene with cash infusions and if the Fed keeps the interest rates low. I see long term a slow increase, but not like the bubble we just experienced.

I also found this prediction that is a bit negative, but worth looking at, but I hope he is wrong about the terror attack:

Gerald Celente predicted a crash in 2010. According to Celente, last year's economic collapse never hit bottom because government bailouts kept things propped up. To make matters worse this year, there will be a collapse in the commercial real estate market, he continued. Celente anticipates a 9/11 level terrorist attack that banks will use as an excuse to devalue our currency. He suggested people refrain from debt spending, keep some cash on hand, and buy local (American made) products when possible.
Gerald Celente has a knack for getting the zeitgeist right.— USA Today
http://www.trendsresearch.com/

He may be a bit out there for most of you, but I know some of you will at least consider the possibility. Happy New Year to all.

For all the fence-sitters:
2010 - "Steady...hold...hold!...hold!...hold!..." 2011/12 - "NOW!"

http://www.youtube.com/watch?v=w7ur3iV6Z34

But, if the currency is devalued, wouldn't debt be effectively reduced in his scenario. If one believed this scenario why wouldn;t he recommend using debt to buy hard assets?

That way, when the currency is devalued, you still have the hard assets (gold, ammo, shelter, land, etc), but the debt (which is based in a specific currency) is also devalued.

Not that I recommend that strategy, since I don;t believe the prediction is likely to come true over the course of 2010.

Totally agree with this. I've always said we wouldn't bottom until 2012, at the earliest.

BTW, that was a fantastic scene. :)

The only monkey wrench is a human caused crisis such as one of the new nuke countries trying it out on a neighbor. That could usher in a whole new set of rules and could justify rationing, new taxes, increased surveillance on citizens, etc. Otherwise, I agree with the 2012 date for a recovery. The only reason it is being touted now is because of the 2010 Congressional races. When the economy is down, the voters turn on the people in power. By claiming the recession is over, they are evading the truth especially the real unemployment numbers and the real foreclosure numbers.

The China lending clamp down does not help.

Yea I am starting to join the double dip crowd now, There was starting to be too much bullishness about the first few weeks this year.

Hmm still need to think about it, as this should be the time we start to recover though.