I have noticed a couple of things that are going on in SD market. Inventory is definitely rising but prices of house are polarized. Those who do not need to sell in a hurry hold their prices very strongly. The influx of REOs definitely drive down the price, but the quality of a lot of REOs is in doubt and some of them might have been severely damaged. Price may be low in these kind of properties but who wants them?? House price in desirable areas held up very firmly although we have this housing bubble problem. Although I do not agree with the newsletter in many ways, one thing I do agree is that there are lots of buyers waiting for good deal. If the property is in good quality and priced right, there are flocks of bidders driving price up, good example is one on Sparren in 92129 (this is my favorite area). Rental market is not so bad provided that there are renters who were once owners. Loan is limited and there are plenty of restrictions on loan approval these days. Basically, if someone finds a good deal, they may not be able to find any good loan.

My prediction is home price will continue to go down but those properties may not be in good shape. Loans are more difficult to get that also drive down the price of houses because there are less qualified buyers. But once this mess is gone, a lot of buyers will be coming out to consume houses again. Hopefully by then, there will be more regulations to prevent people from driving up house prices.