I didn’t say that rental units have record vacancies. I said record vacanies. That’s homes. SFH.
I don’t know how rental rates are on SFH. Apartment rents went up from spring 05 to fall 05 and have decline since. Check the last UT article. The online version missed the graph. The prices now are only slightly above the spring 05 prices. Why did they drop since fall? Article didn’t say.
This is for the person who thinks our wage increase can save housing. Do you really think employers will raise wages just so we can buy houses.
If you follow that logic, we would never have recessions, all we need to do is raise wages and all is fixed.
What do the homes on the market do while we wait for the wages to go up sometime in the future, wait for that day? The ones that sell at lower prices set new comps for future sales.
Future wage increases can set the stage for a potential recovery in the future but for now the prices will go down as long as our current supply/demand situation remains.
You also need to look at the employment scenario. Do we have the types of jobs in San Diego that are likely to see 50% wage increases? Movie making, biotech, nuclear power plant production, alternative energy R&D, Mayo Clinics/best medical centers in the country, auto manufacturers with booming market share? NOPE! We are a low-wage city!
I pulled this data together last winter. From the Employment Development Department, the SD County snapshot. The 3 larges growth sectors are construction, retail, and government. Small hope for wage gains with jobs like that!
Since 2000, SD Cty gained the following numbers of jobs
1) 17,800 in Natural Resources, Mining, Construction.
It turns out that 17,700 of those jobs are in construction. 12.000 of those jobs are in “specialty trade”, and I assume that would be granite fabricators, plumbers, and those who build and remodel homes.
2) 11,900 in Trade, Transportation, and Utilities. Now ask to break it down! It turns out that 10,500 are in retail, mainly due to consumers pulling money out of their homes to go shopping. It would have been great if this growth would have been in utiltiies or transportation, or in investment in new infrastructure, but unfortunately it is not.
3) 8,100 government jobs, with 7600 of them being local.
Those are the 3 biggest growth sectors for SD County since 2000.
A last point: the bulls say that each asset bubble is justified, that the fundamentals will catch up. zk, do you remember during the technology stock bubble, the permabulls said the earnings don’t matter, or that they will catch up. The companies have so much promise, the earnings will catch up to match the stock price. Why do people not learn? Asset bubbles pop on the nominal side.
This is an important point that Rich might want to address. Has there ever been an asset bubble in recorded history that violated this principle? Has any asset bubble popped by the price of the asset staying flat, while the fundamentals caught up?
