[quote=deadzone]How about this for a bet: I say December 2012 Case Shiller for San Diego will be at least 10% lower than December 2010. Dinner at Donovans.[/quote]
deadzone, this could very well be true, due to the OVERWHELMING numbers of NOD’s, NOS’s and “shadow inventory” in popular tract subdivisions built in the last 7 years or so. These numbers COULD drag down the Case Schiller for SD County as a whole.
But if this happens, it will SAY NOTHING about the value of 35-80 year old custom properties in choice coastal areas (which you indicated is your buying area of choice). They’re two completely different animals.
You’re assuming here that folks buying the 1947 small (ex: Pt Loma/upper OB) house are “interest-rate sensitive.” I can tell you that in the last 15 years, I watched several neighbor “boomers” from 91902 (where I’ve spent much of my own life) HAPPILY DUMP their 2700 sf+ albatross on 1/2 AC shortly after their last kid graduated HS and/or finished with CC. They were EAGER to dump the maintenance, utility bills, and 20-30 minute trek in traffic to Shelter Island or MCRD, where they slipped or dry-storaged their “large toy(s).” I watched them give away the bulk of their furnishings/household goods and pets to their kids and move into 1200 sf or so where they could “lock and go” (w/o HOA dues). They wanted to live =< 1 mile from their slips/dry storage, so they could easily access their “large toy(s)” whenever the mood struck them for an impromptu cruise or road trip, etc. Life is too short for daily hassles after you have already paid your dues.
Whatever interest rates were at the time these boomers “downsized” was what they were. Some took out small mortgages and others paid cash for their “WWII boxes.” Besides buyers with construction backgrounds/connections (purchasing a principal residence), boomers are the principal buyers of “smallish” antiquated (as brian would say, lol) well-located coastal SFRs. Neither of these two categories of buyers are particularly “interest-rate sensitive.” Boomers have seen and bought during all levels of interest rates, mostly at rates far higher than now. I should know how boomers think, cuz I AM one. They could give a rat’s a$$. They’ll just eventually retire their small mtgs or leave them for their heirs to pay off when they’re gone.
If you are waiting for the best and most conveniently-located SFRs on the best streets in LJ/Pt Loma to cave in value due to possible future interest rate fluctuations, you may find yourself in perpetual suspension, deadzone.
