I lost the mortgage deduction and property taxes, so those cancel out.
I earn 5% interest on the equity, instead of losing 10% per year (so far). I am debt free. I paid off my credit cards and car. I won’t count these savings in my $1500.
I save $150/month in property insurance, as renters insurance is less expensive (and I have earthquake coverage also).
I pay $2200/month rent instead of $3000/month mortgage. I save $300/month on repairs/maintenance, and $500/month on home improvements. We are the type to keep pouring money into landscaping, patio covers, fencing, and various other remodeling costs. I won’t count the $500 as savings for this example.
I live closer in town, and get gas every 6 days instead every 3 days, saving $250/month in gas.
zk, housing cannot be saved because SD lacks lucrative jobs and the prices are too high, causing 44,000 people to leave San Diego annually. This figure may be even higher this year. People just cannot afford to live here. This exodus is putting homes on the market, increasing rental/homeowner vacancies, and decreasing demand. As long as demand is down, inventory will keep rising, lowering prices.
This can only turn around when the state which caused high prices returns: a population influx. What can bring this about? What will make people want to move here at the rate of 44K/year? Jobs? What kind of jobs? Most of SD jobs are in tourism, retail, military. We have some in technology, but do you see this improving with a recession on the horizon? Short-term, I don’t. In the next 2 years, I don’t see a labor market change. Neither does Cheryl Mason, of the SD Labor Market. The only hope we had was more Homeland Security funding. I know that’s pitiful. Our expected job growth comes from government handouts. We’ve got to do something about this. But with 20% of CAs not even finishing high school, where are all our talented employees to turn this state around?
The SD civilian labor market of 1.281 million, as measured by the payroll survey, is 17% government, 15% retail, 11% leisure and hospitality, 8% construction, and 10% education and healthcare.
Add in a couple 100K people for independent contractors and illegals in construction, realty, barbershops.
Professional and Business Services is only 16%. Telecom and publications is only 3%. Manufacturing is only 8%.
Which sector shows promise for these high wage jobs you’re counting on to save housing? Regardless of inflation, how likely is it that 15% of our employees who are in retail will see their wages go to $ 150 K/year to afford the $500K median home?
zk, I think you get the picture. We just don’t have the type of jobs in SD that can support the home prices we’ve got. That is the main problem.
In Oakland, the median income is $20K higher, so their houses cost more. SD doesn’t have the wages to support these high prices. We don’t have the type of industry to allow half of our population to make $80K/year.
A drop in interest rates can revive housing. But that will be offset by tightening lending. Lenders are tightening standards. If they ever require more than 0% down, this market will go south in a hurry.
A tax change can save housing. More tax writeoffs to save housing. Can the government afford to reduce taxes, at a time of record budget deficits? If they reduce, it will be to encourage alternative energy, not housing.
