Yes, San Diego’s economy is based on us selling homes to each other. I checked the hiring data in January, and it was a wake-up call. Manufacturing is down, and hiring is basically in all things RE: construction, realtors, mortgage officers, service sector which caters to homeowners who have taken out home equity lines of credit (furniture, home improvement, clothing stores, car dealers, vacation sellers, restaurants).
I have a concern about local banks. Are they strong enough to weather a portfolio loss when their mortgages aren’t paid, their Fannie Mae bonds don’t pay out, etc. I thought my credit union would be immune, but today I found out they hold their mortgage loans in-house. Great, I want my bank to be holding mortgages on overvalued real estate. I cashed out by selling my overvalued house, but my bank is still busy making loans. I don’t even have a finance degree, but if I were in charge at the credit union, I would put an immediate stop to mortgage lending and sell the portfolio to another sucker. Even the banks are idiots. No one knows when to get out.
This morning I spoke w/ an attorney, who had an auction business in the 1980’s, auctioning houses. He thinks RE is still a good buy because the interest rates are so low. He said in the late 80’s it was the high interest rates (16% prime, I think) that caused foreclosures. So he believes it cannot happen now. I tried briefly to tell him about adjusting ARMs, but he kept cutting me off, so I dropped it. There are too many fools still out there.
