The last downturn in SoCal in the early 1990’s was caused mainly by huge layoffs in the aerospace industry, which caused a recession in LA and SD. There wasn’t nearly as much speculation as there has been in the last 3 years. Loan standards for residential properties were tougher in the early 1990’s or late 1980’s than they are now. There wasn’t nearly as many 100% loans as there are now. If in the next 6 months, there were 50,000 layoffs of high-paying jobs in either the telecom or biotech industry in San Diego, that would be similar to what happened in the aerospace industry in the early 1990’s.
The current downturn has been caused more by excess speculation. Prices are going down even though the overall economy is fairly strong in San Diego, with low interest rates and low unemployment. That’s why I don’t foresee huge price increases in the next 10 or 20 years, along the lines of the 20% appreciation for three stright years that we saw from 2002 to 2004.
