In terms of percentages I think we’re about on track for what I expected. Some of you may remember at the very beginning of the year we were speculating that the third quarter of this year was when we thought it would get really interesting and things would start moving more quickly.
However, I was wrong about which of the fundamentals would have the most impact. I thought the foreclosures would go to REO resale more quickly and I didn’t think the financing would dry up as quickly as it did. It’s been a little shocking to see the volumes dry up so quickly, looking in hindsight I should have realized that was the only way it could really go.
Some of you may think it’s moving real slowly but you have to keep some perspective. The bust of the 1990s took 6 years, and the price spike it corrected for was only 1/3 as distorted as this one.
The other thing I think is messing up some people is when you make a distinction between s/w Riverside County and San Diego County. Some of you go beyond that and focus more narrowly on your favorite neighborhoods, which by definition would be among the last to show declines.
Sure, there’s a county line separating the two counties, but economically it’s still basically one region operating off the same employment base. Actually, s/w Riverside is about split between our weaker employment base and the stronger employment base of LA/OC. I have a feeling that if s/w Riverside had to rely solely on SDs employment base it would be doing even worse than it is right now.
The unwinding of this distortion will come from the outskirts in, so I’m not at all surprised to see all the action in s/w Riverside and the outlying areas of SD County and relatively few problems in the central areas. I do think that some of the “coastal will never go down” folks will come to realize differently before this is all over.