Econ 101 – future supply (low for N. County Coastal) vs future demand (seems to be holding strong.) Does this boost the simple argument?
What you seem to be missing, and is the gist of the many examples here is that the “simple” supply-demand curve relates to price. An analysis by Global Insights, which takes into account the historic desirability of an area, as well as population and salaries, puts SD about 30-40% over its intrinsic value. This belies the idea that population growth will keep RE up.
So does the fact that from 1990 to 2000, the number of >$100k (adjusted for inflation) households has dropped, as a percentage of total population. In 1990 it was around 28%, but in 2000 the percentage dropped to about 16%. This is due in part to a high number of younger, college aged population moving in.
A survey done by (I think) Forbes, showed that a healthy chunk of higher-income college grads all but killed themselves to get into RE in the major markets since around 2001, possibly “stealing” demand from future years. In addition, retiring boomers have begun putting off home sales in metro areas (to move to less expensive locales) in an effort to wait out this crunch. This is fueling pent-up supply. In most major markets, the bulk of For Sale’s are becoming need-to-sell inventory (forced sales, job move, retirement, bought another home, etc).
The fraction of people that can afford the median priced home is less than 10 percent, see:
[img_assist|nid=4186|title=SD and LA Affordability Index: Probability of no crash…small|desc= The chart above shows that less than 2% of LA and 6% of SD can afford a median priced home. |link=node|align=left|width=466|height=360]
With the fundamental firmly against a continued RE boom and the expected value of SoCal RE running negative, the burden of proof is on RE bulls. The sunshine tax did not save Florida and it will not save California.
