It is somewhat discouraging when an economist like Thornberg suggests that there won’t be a large drop in prices, isn’t it? It “shakes my foundation” and has me asking, do I need to buy now…am I wrong? After a few hours, I snap out of it.
The one thing that I have yet to hear be addressed is the cause and effect possibilities of folks who have purchased “investment” homes in areas outside of San Diego that clearly WILL suffer price declines. Areas like Florida, parts of Arizona, etc…isn’t it possible that this is the “economic shock” or surprise that will de-rail our local markets? For instance, someone who bought a home in Queen Creek, AZ may lose all of their investment and ruin their credit in the process. Is it outside the realm of possibility that there will be spillover into the local markets?
Obviously, I believe there will be…I know several people locally who have purchased “investment” homes in AZ, as they had given up the stock market. Also, anecdotally, my LL is selling the SD house he has lived in the last two years to rent. Fortunately, he is not selling the one I am in. I have been watching the sales process from a distance, and it seems likely that he will experience MAJOR difficulty trying to get what he wants for it. He wants and NEEDS to move. I have other friends who want and NEED to move.
I remain unconvinced that prices can’t and won’t drop when sellers who NEED to sell (how ’bout that increase in notices of default, by the way?) reduce their prices to get the deal done.
