Let the supply increase. Based on the bidding wars and level of activity I’ve seen first hand (as in I spend time in real estate offices seeing pending contracts, closed escrows, multiple offers) I think increased supply (assuming the Govt doesn’t intervene any more (like that is likely)) will have a small effect out here. At a certain price it makes no sense for a bank to release the inventory if they feel they can hold it on their books and wait it out. If there was a large amount of inventory coming online but with no buyers out there then I’d give you argument more weight, but there are enough of us knife catchers to screw up your grand plans of collapse. The fact of the matter is the average family with an average income can afford an average home with a traditional mortgage out here.
You have to remember that us piggs and bears in general are the *very* small minority. The general public (the folks buying these homes) are for the most part not educated in the market or even the the economic forces causing this mess. They’ve watched prices shoot up beyond their means (even in such a horrible place like Temecula) and now they see beautiful homes available for less than they are renting. Job losses or not, when you have house prices that can be supported with a dual income family with retail jobs you have indicators of a stable/bottomed market.
I have a close friend that just opened escrow out here, 2 years out of school, recently married, single income teacher’s salary. Parents supplied 3% downpayment. They’re paying less for a house than their 1bdrm apartment in Menifee. Think about it. Homes more affordable than renting, government intervention, prices in line with income.
You also need to look at the regional picture – Temecula contends with cheaper option north – Menifee, Perris, Wildomar, Lake Elsinore, Moreno Valley, Hemet. If Temecula goes down to 50, 60 psqft for average places are we going to see homes in Menifee for $25/sqft??? Moreno Valley, $10/sqft?
