I don’t see how anyone can predict with any real certainty exactly what effect the fire will have on the local economy and home prices. Only time will tell. That building will take place is a no brainer, but in what volumes is less certain. Presumably insurance claims need to be processed, and that’s assuming that either insurance or Federal aid is in place for everyone. However, my overall take (and this is a personal opinion) is that San Diego is not a particularly attractive place to live at the moment (think New Orleans), and that is almost sure to suppress prices.
As to whether prices have been declining at a slower rate than expected, what was the expected rate (%) of decline, and how much has this differed from reality? One is reminded of a Youtube post on the subject of housing bubbles that compares them to the slow release of air from a tightly pinched balloon. As they say, never expected the expected … but the odds seem heavily in favor of a continued correction. Even the industry heavy weights who have devoted considerable efforts to propping up prices (see the “Schiff-Crash Proof” post), are now conceding the inevitable.
I feel sorry for people who have invested hope in home equity as a means to a more secure retirement, but real sustainable wealth needs to be created out of something concrete (excuse the pun), and not air which is the main component of bubbles. So nothing has been lost, because there were no real gains in the first place (unless you sold at the peak and moved to Belize).
