[quote=rockingtime]Yeah, my realtor and acquaintances are telling me “this time is truly different” and CA is entering its golden period now and house prices would keep going up.
Minimum pay is also raised in LA now people can afford half a million dollar crap shack easily..
Minimum pay rise coming to SD as well
We’d see :-)[/quote]
OK, well my generation seemed to have no problem buying up 3-4 bdrm “crap shacks” for $40K to $95K in ‘hoods you probably wouldn’t even drive though while the minimum wage in SD was $2.40 to $3.35 hr. And that was during the era of fixed rate mortgage interest rates hovering between 9% and 14%!
We had very little “new construction” to choose from and what was built new was outlying and therefore undesirable to dtn workers due to long commute times (the fwys were narrower and there were fewer of them than there are today … ex: EC, Santee, PQ, Scripps, Poway, Esco, etc). Much of the original *newer* RB at the time was situated in HOAs which were convenanted specifically for residents over the age of 55.
In about 1979-80, Sorrento Valley began getting off the ground with just 3-4 companies (mostly biotech) startups situated on ONE dead end street. Scripps Ranch had TWO dead end streets at that time with maybe 6-8 companies (mostly finance and insurance companies). In SD, most of the FT work (which paid enough to support a household) was in factories, offices and financial and government institutions in and around dtn SD and Kearny Mesa.
Quit whining, rockingtime. It IS “different” this time …. MUCH different. Adding to that BIG DIFFERENCE is that today’s family-forming homebuyers in SD have considerably higher expectations for a home than same of yesteryear. I wonder what would happen to this group’s “expectations” if fixed mortgage interest rates were to rise even to a modest 8%. My opinion is that this group is so incredibly spoiled that I predict they would just leave the county in search of homes that meet their lofty expectations and also which they can afford. That’s always been a tall order in SD but the very low prevailing mortgage interest rates of the last 10+ years have “masked” the situation, allowing first and second time buyers to slide into homes and areas which were unheard of for a FTB or STB to be able to buy into before about 2004.
Even those who lost their home to SS and FC in the past decade and have rebuilt their credit or are in the process of doing so ARE NOT and WILL NOT, for the most part, “settle” for any home that is lesser (in house or location) than the home they lost (the one they could never afford in the first place).
If this group is still unable to buy back a similar home/location to the one they lost, they continue to rent until they can. It’s hard to downgrade one’s lifestyle when one has been living beyond their means for several years.
This is why flippers are still doing well in SD. They are buying and flipping homes successfully for a profit which today’s end users are unwilling to buy (or the home won’t qualify to be mortgaged). Today, 1st and 2nd time homebuyers are willing to pay $100K to $200K more for the same house which an enterprising flipper team recently bought low and spent 2-4 months flipping. Unlike their parent’s generation, those same buyers would not even consider viewing the inside of the same house in the condition the flippers bought it in.
Up until about the late nineties, 1st and 2nd time buyers of a primary residence in SD were willing to purchase a cosmetic or even heavy fixer and about half did so. Most moved in at COE and remodeled the residence room by room as time and money permitted. Yes, “professionals” routinely did this! Doctors, dentists and lawyers found time for DIY, even if it took 1-3 years!
In sum, five reasons why it IS DIFFERENT THIS TIME are (1) chronically low MIR’s for 10+ years and ongoing; (2) likely 8 to 10 times the available foreign cash sloshing around at the ready to buy CA coastal residential RE than there was 15+ years ago; (3) major SD job centers moved northward in the county and greatly expanded; (4) an unbelievable amount of newer construction to choose from in all four corners of the county, (leaving SD County essentially built out), and; (5) Gen Y’s pronounced sense of entitlement as to the type and location of a home they will actually make an offer on.
