There do appear to be a huge number of new (nouveau) rich homes in North County SD. Evidence to date suggests that prices will drop most for lower-income/starter homes, but this may be worth questioning:
1.) Everything has been overbuilt, but which categories (i.e. price) of homes have been overbuilt the most?
2.) A recent WSJ article showed that “high-interest loans” have been used much more broadly than previously suspected.
Interestingly, the peak year for these loans was 2006 (not 2005) and the ratio of loan value to proportion of loans changed as well, indicating that more expensive homes were being bought more often with these high interest loans.
3.) The collapse of jumbo loans adversely affects the “working rich” as much or more than the working class.
4.) The corrosive effect of market conditions (declining prices, softening economy, harsher lending standards) should tend to “work their way up” through the housing market, first affecting cheaper homes, and then more expensive.
So, will North County luxury look more like Las Vegas boom in a couple of years? Santaluz already has more for sale signs that Walmart after Christmas. What about Crosby, Carlsbad, etc.?
