[quote=kev374]You should realize that there have been interesting articles in the press lately about investor enthusiasm dying down slowly. Do you know that rents are actually deflating now because there are simply too many rentals and it’s expected to get worse. Think about it logically, when rental supply increases rents WILL go down, this in turn causes investments to generate lower returns.
When investments generate lower returns the urge to cash out accumulated equity increases and people start dumping their properties. This dumping starts a deflationary cycle leading to even more dumping and even lower prices.
A mania cannot be sustained forever, this is common sense…eventually things cool off, some investors will get out in time and make a killing at the expense other POOR SOULS who thought paying half a million dollars for a dump in a blue collar neighborhood was a good idea!!!
The only shame is that these POOR SOULS will go crying to the government about how they are suffering because they are now losing their homes. They did not bother to use a thing called “Reason” that would’ve told them that an entry level house in a middle class neighborhood with teachers and accountants living in it should not cost half a million dollars![/quote]
You have to be really careful when looking at national real estate trends and trying to squeeze the numbers in ANY locality.
San Diego, in particular, is NOT the rest of the country. Both the timing, velocity and degree of volatility is likely to be different. Others here are in a much better position than I to predict how different and which direction, but I guarantee you that SD will not match national trends in any of those variables.
My guess is that investors, particularly the large PE investors, never did much buying in SD with an eye on cash flow, particularly in the above median price ranges. (Recent data reflecting the cash-only buyer median prices paid in So Cal bear this out.) So I think it’s unlikely that SD area rents for above median SFR will suffer sharply, and even less likely to have any adverse affect on prices by liquidating their assets.
