Davelj: Very thoughtful and well reasoned post. While I would agree with the overall assessment, I think you nailed the one important fact dead on: Given the amount of inventory due to be added in the next 2.5 years, there simply aren’t enough buyers at these prices to sustain the market.
Another thing to think about is this: Lending guidelines are tightening, as is credit and interest rates should follow (in spite of Bernanke’s yeoman efforts to stem that tide). When that little trifecta comes completely into play, the cost of funds and the ability to secure financing (especially for some of those nosebleed units) will be severely curtailed.
While I concur with your assessment of both San Diego and the new breed of affluent buyer that chooses to live here (even on an absentee basis), I would also argue that those buyers represent a small subset.
Speculation in downtown condos has been rife over the last few years and, combined with the other factors (excess inventory, tightening supply of money, etc), should cause a correction in pricing. How much? Who knows. But 6,000 fresh units in a struggling market can’t be good.
