The number of people who DESIRE to buy comprises the demand for real property. RE permabulls love to point to the simple demand for homeownership as being one of the big fundamentals – as far as I’m concerned this is a blatant lie and they know it.
Simple demand is basically irrelevant when it comes to real property market activity. It is not until an individual’s DESIRE to buy is backed up by the ABILITY to satisfy their desire that the simple demand for property becomes “effective demand”. That’s the only number that truly matters and the permabulls have been ignoring it.
Regardless of how many people are coming or going from San Diego, the only numbers that would have an effect on pricing is the number of people who make the wages or otherwise have the money to afford the sale prices resulting from that pricing. That’s why when the permabulls point to gross employment as being relevant I go into convulsions. It doesn’t matter how many service jobs we create because basically none of them contribute to the effective demand for real estate here in this region. Every homeowner or homebuyer wage that moves out of the region has to be replaced by a homebuyer wage or else the effective demand that has supported the pricing (so far) erodes.
Net population outmigration is particularly troubling because those numbers include an inordinate percentage of homeowners/homebuyers, and they are largely not being replaced. It’s one reason we have more inventory than buyers right now.
