SDR
The Mira Mesa Activity caught me be surprise this week.A client, who I thought was waiting to get out of Mira Mesa, brought up buying a second house there.There are indeed many pendings. I checked sales for the last calendar month and there were only 2 over last year. My guess is that failure rate for escrows will be pretty high or it will take a long time for some of these properties to close. Still,offer activity and pendings are pretty surprising. I checked the surrounding areas, which are all higher priced of course. It looks for the most part like activity matches last year pretty closely or that sales volume will be even lower.
This comparison has brought up a new concept for a possible trend. “Flight to Cheap”. This seems to make sense. Geographically, Mira Mesa is much like the other higher priced areas but is on fire by comparison. It is interesting that a year year and a half back. We were discussing “flight to quality” with regards to CV. Which was relatively on fire at the time. Money was still easy to get in large quantities then now it is not.
The “Flight to Cheap” Syndrome may get stronger for several reason. Buyers want to hedge potential losses with modesty(what a concept). Money is tight, probably especially down payment money. It is easier to come up with 10-20% down on 350K than 650K.
Now the question bothering me is… what happens after this hypothetical flight to cheap ? Is Mira Mesa going to find support first and the surrounding areas come down relatively? Is this a false floor and “cheap” ain’t “cheap enough yet(even in Mira Mesa)? I am thinking some of both but I am feeling like making predictions gets sightly more dangerous as time and price declines go by.On the other hand I don’t want to haphazardly slip into inuendo because of a few sales or pending sales.
