[quote=Rt.66]“Those that purchased recently, are hoping for a fairy tale market turn around to restore their equity or those just too antsy to remain on the fence will try like the devil to convince themselves and others that this is somehow not just getting started and somehow will avoid getting much worse.”
See what I mean? Now income averages need to have the bottom 1/3 lopped off to be relevant. Renters should be excluded from any ratios? Why, because we will now get our first time buyers, from “first time buyer fantasy island”?
I was surprised at the “It’s different here” posts. 2.5 x earnings here is SD will still be a hefty sunshine tax when fly-over country is selling for 1 x earnings.
Temecula Guy,
I’ll beat your $165k challenge. Hows about we start at $150k in SD?
Right now today I have 52 homes for $150k or less in SD to choose from. And that’s excluding condos! Sure at this point they are not the cream of the crop obviously. And I really should not have to explain that SD will have that crazy averages thing happening, so yes coastal SD will be higher than inland, duh.
To assume I meant La Jolla or Carlsbad would have a median of $165k when I say “SD will have a median of $165k” is just more RE Bear word games.
You RE bears are insanely humorous. The banks hold 80k CA houses in shadow inventory, NODs, preforeclosures and foreclosures are rocketing upward and you look at the dummies bidding up the price of the obviously and grossly manipulated supply and use them as some indicator of future RE values?
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Good grief! How on Earth is flyover country going to go en masse to 1x earnings?
There are fundamental floors to how far housing can fall. Housing won’t fall to 1x incomes in most of the country. It will fall to it’s long term sustainable rate of 2.5-3x incomes. Why? Because at anything below that level investors start stepping in because they can buy that home and rent it out and make enough in cash flow that it becomes a better investment than anywhere else they can put their money.
Moreover, at below that level you can’t BUILD a house any more. There are areas in So Cal like Temecula that are already at that point. Prices in those areas are being solely supported by the flow of REO’s – but there seem to be plenty of buyers that are now coming out of the woodwork and buying in those areas as well. Why? Because it makes good economic sense to – if you’re employed in Riverside or North County, you can now buy a 3K sq foot house in Temecula and pay LESS per month than you were renting a 1500 sq. ft. townhome or apartment. To a lot of people, that seems to be justifying a 45min-1hr commute.
As others here have pointed out, repeatedly, the fact is that it IS different here (just not different enough to continue the incredible bubble prices of 2003-2007).
BTW, nobody was saying that LJ or Carlsbad would have a median of 165K – you’re putting words into the other posters mouths here. But a San Diego median price of 165K would imply that prime high end territory like LJ would drop into the 400-500K area. Every poster on this board would buy a La Jolla house if that were the case.
The banks may be holding a ton of shadow inventory, but I haven’t seen ANY sign that they’re going to flood the market. It appears they don’t have to – in point of fact, they may not even be ABLE to (constraints on the number of people they have working in foreclosures). Are they manipulating supply and demand? Yup. But it appears they have the means to do that, and whether or not you like it, it appears they will continue to do so.
