Given that foreclosures are skyrocketing and ARMs will be resetting well into 2009, I doubt we are poised for a recovery anytime soon. Not to mention the rampant overbuilding and mortgage fraud in outlying areas (like Temecula).
Combine that with a local economy that is over-dependent on RE and its associated industries. I simply don’t see where the huge influx of buyers are going to come from, especially given the tightening lending standards. Even for the few high-paying jobs that are here, most folks are not going to be willing to relocate due to the high cost of living.
There are two things that I think may create an early bottom.
1. Cash-rich renters that sold during the peak and are waiting to buy back in. I call this the “Piggington Effect”. They are flush with equity and can afford to buy an overpriced asset if it means getting into the kind of house they want.
2. Wealthy people in other states that dig SD and want to buy a vacation home here. They will have no shortage of condos at bargain prices over the next year, for example. As you can see from Rich’s employment charts, leisure is big business in this city.
Beyond that, its gonna be a slow decline until the regular folks with stable income and good credit (like me) can even afford a starter home and start buying.
