One, the coming tidal wave of option-ARM resets in the prime segment, which reach out into the 2011 time frame.
Two, the degree to which the US and SoCal economy has been dependent on the housing bubble as the engine for economic growth. As the median house price falls, median income is gonna fall right along with it.
So, if the housing bust is a ball game, it sounds like you think we are about in 4th-5th inning. I think we are still in the first.
A ‘black swan’ event that might help SD is the creative destruction of excess inventory attracts some big companies to the area, particularly in the IE. I can easily imagine a company like Google buying up an office complex in Temecula and offering a free house to any engineer that relocates to there. Could be very attractive to Bay Area renters with families.
