People now widely acknowledge the once-blasphemous: that the housing market can slow, that home prices can decline, and that both of the above are happening here and now. But we are a cheerful people, apparently, and such admissions are often quickly followed with the disclaimer that the housing market should be back in action soon enough.
Take, for instance, the following quote from El Cajon Councilman Gary Kendrick, as appearing in a recent U-T article on El Cajon’s stalled condo conversion market. Mr. Kendrick is singled out only because this is a very typical example of the many similar proclamations I’ve heard expressed by assorted authority figures in recent times. Says Gary:
“It’s simply the market cycle that happens every few years, and right now we are in a cooling-off period and that may last a year or two,” he said. “Three years from now, people will be saying, ‘I wish I bought one of those condo conversions in 2006.’ ”
Well, maybe I’m singling him out a little bit because that last line is so priceless. You may wish to record it for future generations to enjoy.
I took notice of Mr.
I took notice of Mr. Kendrick’s remarks because the article mentions that he works as an appraiser. I went to look his name up in the state’s database to see how long he’d been appraising, and found that he’s not listed in either California’s state registry nor in the National Registry. I interpret that to mean that he isn’t a licensed real property appraiser, which would bring his expertise on the real property market into question.
That’s okay, though. He’s not the only one noted in that article whose opinions are questionable.
Good luck Gary! Yes, much
Good luck Gary! Yes, much wishful thinking on his part. I personally know at least 1 couple with a home on the market and even with a 50K price reduction can’t even get a hint of an offer. I’m probably going out on a (short) limb here, but stick a fork in it, it’s over. Now the question is how long and how far down. I’ll stick to my thought on a 50% loss in NOMINAL (not real) prices. How long? I’d say at least 10 years before we come out of the trough. Being a San Diego native for half a century but 4 years away in college, this boom has been unprecedented in duration and price run-up. With that fact in mind, the downside will be that much more painful and longer lasting than past busts.
“Since 2002, the city has
“Since 2002, the city has approved about 3,200 units for conversion, nearly 18 percent of the total number of apartments in El Cajon. ”
That pretty much explains the low vacancy in apartments doesn’t it. While El Cajon may be extreme, the other cities have basically been doing the same.
At least in Huntington Beach, some of the council appear to be facing jail time for being involved in the mess.
I’ve heard plenty of people
I’ve heard plenty of people with that same nonsense. A guy at the gym told me today that sales in his neighborhood picked up lately, and that the guy in the weight area, a real estate millionaire, said November would be a good time to buy again. I think the real estate millionaires are in the most denial, since it’s hard to turn your back on something that made you rich. Real estate has been good to them, so they project the past to the future and think it will continue being good to them.
Other people told me the market will turn around this spring.
Umm,
I don’t know about any
Umm,
I don’t know about any decrease in apartment vacancies in El Cajon. The time I appraised an apartment building I noticed vacancies seemed to be up and rents seem to down a little.
I’ve appraised a number of apartment/condo conversion properties over the years, including some in El Cajon. I appraised one property in EC that has spent almost 2 years in the conversion process and they apparently still aren’t done. They ran into a lot of unforseen problems they could have avoided had they done their research prior to purchasing rather than after. These owners are currently in default and the lender will likely have to take the property back and liquidate it – which in turn will cause a loss for them. I’m kinda annoyed at this because I told the lender when I performed the first appraisal that it didn’t look like these guys knew what they were doing and they were basically gambling that there wouldn’t be any problems.
I’m a renter in the bubble
I’m a renter in the bubble burdened LA area and I am pleased to hear intelligent analysis that support trends that will allow me to someday afford a house. I grow tired of the blissful banter that prices will level off in a year or two.
The income to housing price ratio graph is telling of what is to come in San Deigo, and I’m sure LA isn’t that much different.
This bubble has a ratio of about 14:1, and the previous 2 about 9:1. Generally speaking, should that make a return to normalcy faster or slower? Normalcy meaning average income:price ratios, and of course assuming a 100% increase in average income does not occur.
The article says 6 years has been a minimum, but with the “Credit Tsunami” crashing, unprecedented appreciation, and seemingly a speculative stock market, it is more likely the rebound will be quicker or slower than in the past?
“Experts on both the
“Experts on both the pessimistic side and the optimistic side agree on one thing: The impact of the ARM adjustments will occur over several years. ‘It’s a time release,’ says Christopher Cagan, who did the risk analysis at First American Real Estate Solutions. ‘It’s not a single impact like Pearl Harbor.’” – Christian Science Monitor
Sorry, it’s going to take 5 -7 years, I think.
This “cooldown” period will
This “cooldown” period will last longer than a few years, I wouldn’t be surprised to see homes slump into 2010.
Bob Flippa
http://thisoldhouseflip.blogspot.com
Hi,
I’m living in Downtown
Hi,
I’m living in Downtown San Diego right now. Every day I drive to work i can see, literally, dozens of cranes putting up new condos in the downtown area. If you check real estate web pages, you can see there are a minimum of 40 condos planned for completion in mid-late 2008.
When I moved into my apartment in DT, the manager let me in on a secret. Only half the building is rented out, and the building is 2 years old. If they can’t even fill vacancies in apartments here, how is this going to affect the 40ish condos that are soon to be developed? Also, why are there so many condos in planning/developing stages? People with invested money understand the realities of this market, dont they?
A good rule of thumb is to follow the money to find out what those in the know think is important. So, why do those with money keep building out here?