I’m in Carmel Valley near I-5. The neighborhood is Torrey Hills and the landlord said that even though house prices were falling in the area, the mortgages were still between $5-8K per month. People in that area of Torrey Hills have been asking some outrageous prices for houses and not getting it. The house I co-owned in 2002 only went up in value by 30% by the time I sold my share.

I used to own in this area and have seen houses that were on sale for $700K in 2002 on sale in 2006 for 1.45 million. Neither of these properties sold where the buyer tried to get close to twice his purchase price.

The apartment owner, it’s a big complex, probably saw what other places were getting for rent and decided to increase their asking price. Maybe they are trying to clear out the complex of middle class people so that only professional couples with two incomes live there. They may be trying to get rid of families as well, knowing that one income may be all they have.

We will likely have a recession in 2007 or it should be obvious by that time, so they may have to lower their rents in 2008-2009. We might be looking at houses by that time.