1 year ago — “Real estate guru: Local housing market stable”

[UTC renter]

For your amusement, here is an article from almost exactly year ago featuring our favorite Alan Nevin. There are some classic lines in here. Enjoy.
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http://www.nctimes.com/articles/2005/09/15/business/news/14_57_539_14_05.txt

Last modified Wednesday, September 14, 2005 9:10 PM PDT

Real estate guru: Local housing market stable

By: BRADLEY J. FIKES – Staff Writer

LA JOLLA —- Waiting for San Diego County’s supposed housing bubble to burst? You will wait forever, said Alan Nevin, a longtime local real estate specialist.

The double-digit annual increases in home prices of recent years dropped last summer to about 5 percent to 7 percent a year. That transition eased what had been an unsustainable spiral down to a normal market that can go on indefinitely.

“And everybody missed it,” said Nevin, director of research at San Diego’s MarketPointe Realty Advisors. “People are just starting to recognize it now.”

Nevin spoke Wednesday morning to about 50 people at a series sponsored by Southwest Community Bancorp, the Carlsbad-based parent of Southwest Community Bank. Money raised from the event at the La Jolla Radisson went to the Alpha Project for the Homeless.

From Oceanside to downtown San Diego, the economy is so well diversified it is nearly invulnerable to collapse, Nevin said. That diversification and the stabilized real estate market makes prospects for the region almost scarily good.

“The economy is basically healthy. There don’t seem to be any weak spots,” Nevin said in after-talk remarks. “Right now, there’s no one employer that has more than half of 1 percent of the jobs in the county.”

Nevin sketched a portrait of a county bringing in new housing and renovating old and even dangerous neighborhoods, a county possibly on the way to becoming an internationally favored place to live by the well-to-do —- bringing in yet another source of wealth to sustain the real estate market.

About the only people left out of the picture are low-income residents, Nevin said, because cities don’t allow enough apartment construction for them. Cities have plenty of property that could be sold off for apartment construction, he said, but they don’t because voters oppose it.

Asked where he would recommend buying real estate in the North County coastal area, Nevin replied: “Everywhere. There’s no negatives.”

Nevin said he was surprised at the economy’s continued strength, since the region has experienced nearly a decade of continuous growth. The early years of the 1970s, ’80s and ’90s were all rough for San Diego, Nevin said, but that hasn’t happened in the first part of this decade.

Much of Nevin’s talk focused on downtown San Diego. With its juxtaposition of high-rise condos and entertainment, that area has become increasingly fashionable. Nevin said that style of living fits San Diego County, which is increasingly becoming a society of singles and childless families.

Oceanside will increasingly come to resemble downtown San Diego’s high-density, high-rise profile as its redevelopment goes forward, Nevin said.

“It hasn’t been terribly successful to date with multifamily,” Nevin said. “But the single-family (homes) on the north end have been unbelievably successful.”

That high-rise transformation could also be sustained in Leucadia, Solana Beach or Encinitas, Nevin said, but the governments there won’t let it happen.

Nevin’s talk was reassuring, said Frank Mercardante, Southwest president and chief executive.

“He emphasized there is no bubble and there won’t be, because of the demand for real estate here in San Diego County,” Mercardante said.

Mercardante said that as a banker, he has to think of problems that would keep him up at night, and asked Nevin what would keep him up at night about the economy.

“He said, ‘Nothing,’ ” Mercardante said.

Contact staff writer Bradley J. Fikes at (760) 739-6641 or [email protected].
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[bob007]

i love these articles

[UTC renter]

Another one, from December 2005. Just for the record, and general merriment.

http://www.signonsandiego.com/uniontrib/20051215/news_1b15outlook.html

Pros see no doom, gloom in slowdown

Bursting of price bubble not in view

By Emmet Pierce
STAFF WRITER

December 15, 2005

A panel of economists and real estate professionals meeting at the University of San Diego said yesterday the county’s housing market was returning to normal growth patterns following the boom that began in the late 1990s.

“I think the bloom is off the rose, but there is no doom and gloom,” said Alan Nevin, chief economist for the California Building Industry Association.

The fundamentals of the housing economy remain sound, said Louis A. Galuppo, director of USD’s Burnham-Moores Center for Real Estate. “We may see a decline in sales but not prices.”

Despite “air leaking out of the tire,” there are no major economic triggers, such as massive job losses, to cause the housing market to crash, said Joe Anfuso, chief financial officer of Shea Homes San Diego.

Outlook 2006, Burnham-Moores’ sixth annual residential real estate conference, drew about 480 people to USD’s Jenny Craig Pavilion. Those in attendance for the early-morning session heard experts dismiss the possibility of a bursting real estate price bubble.

Despite rising interest rates, a growing for-sale inventory and a slowing sales pace, the county’s shortage of housing will prevent prices from dropping steeply, speakers asserted.

“It’s Economics 101,” said Leslie Appleton-Young, chief economist for the California Association of Realtors. “It’s demand and supply.”

In figures released outside the conference yesterday by DataQuick Information Systems, the county’s median home price rose 6.4 percent in November, far less than the double-digit gains of April but strong by traditional standards.

Addressing the statewide economy, Appleton-Young forecast “a slight decline in home sales” for California in 2006. Many established homeowners have cashed out rising equity and now lack the funds to trade up to larger homes, she said. “We are going to see people staying in their homes longer.”

Another reason homeowners are staying put is Proposition 13, the landmark property-tax-cutting initiative. Passed in 1978, the measure limits tax increases on properties until they are sold. Many owners are reluctant to sell and give up their tax breaks, Appleton-Young said. If they buy a new home at a higher price, “they look at doubling and tripling their taxes.”

Several speakers at the conference addressed the use of new lending products that had enabled middle-wage consumers to attain financing for high-priced homes. Many “creative” mortgage loans have low, introductory payments that adjust upward with prevailing interest rates after several years. In general, they shift risk from the lender to the borrower.

Anfuso said fears that such loans would trigger defaults were misplaced. Many borrowers “are going up the wage scale” and will be able to handle rising payments, he said.

Michael Perry, chairman and chief executive of IndyMac Bankcorp, said he expected new federal guidelines to address such loans. Appleton-Young said some borrowers may find themselves overburdened by debt because of newer mortgage products.

“We may see a blip up in foreclosures and delinquencies,” she said.

During a panel discussion called “Has the Bubble Burst? What’s Next?” Alex Zikakis, president and founder of Capstone Advisors, said he didn’t see a strong presence of speculators in the local residential real estate market. Jill Morrow, president and chief operating officer of Coldwell Banker San Diego, said the local housing market was not driven by investors.

“We have a lot of diversity in our economy,” she said.

In her forecast, Appleton-Young predicted a 2 percent statewide decrease in single-family home resales next year. She anticipates a 10 percent statewide increase in the cost of a median-priced resale home.

Citing an affordability crisis, Appleton-Young said trends showed that only about 15 percent of California households would be able to afford a median-priced home, compared with about 50 percent of households nationally.

In the long run, California’s lack of affordability will lead more businesses and employees to consider moving out of state to areas where homeownership is more attainable, Perry said.

USD economist Alan Gin said the county’s overall economy would outperform the state and the rest of the nation in 2006. Gin said he was concerned that most of the jobs being created here offered modest salaries, however. He also cited rising interest rates and high gasoline prices as concerns for local consumers. Even so, the housing market will cool but not collapse, he predicted.

Appleton-Young called California real estate a market in transition. “I think we’re in for a soft landing,” she said.

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[Bugs]

If there’s one group of people who should be held accountable for their public comments, it’s these guys.

[UTC renter]

Yes, I wonder if they will ever be legally accountable. Probably not. But one could possibly start something like a “hall of shame” archive, where these people’s public comments would be posted for everyone to see.

[powayseller]

Their reputations and future salaries depend on the accuracy of their forecasts. If so, by 2008, these people will be working at Walmart; after all, what kind of job exists for an economist who can’t make forecasts with the data right in front of him? Heck, I even correctly pegged he SD economy back in December 05, and I’m just a housewife.

This dire lack of accurate forecasts is so obvious, that I realized it is a void screaming to be filled. For this reason, I am starting a consulting company, specializing in the San Diego economy. We need accurate news, analysis, and forecasts for San Diego, not just the fluff coming from Nevin, Gin, Gregory Smith, Christopher Thornberg, and possibly SANDAG. SANDAG is pretty good, but they don’t come right out and say there is a bust coming. They have a dual responsibility, to support our economy. I will be completely independent, so I can speak freely. My website will be a compliment to piggington, not a competition. I want to build further on what Rich has done, by expanding into employment and forecasting. I have tons of great ideas, but the most important, how to make money, is not yet fleshed out.

Does anyone have any ideas or comments about what is missing in San Diego’s economic forecasting? What would you be willing to pay for? Realize that Alan Gin is biased because he is paid by the real estate industry. If you want an unbiased economist, like Roubini or Baker, who would pay this person? If the person is paid by a company, their reports are slanted to promote that industry. What services would a forecaster provide for a fee, to allow her to stay independent? Or does everyone think everything internet related should be free? Would any of you pay a monthly access fee for pigginton? How much?

[UTC renter]

In principle, university-based economists are supposed to be a source of independent, science-based, predictions. Presumably, that’s what the UCLA forcast is supposed to be all about. In fact, if you read Thornberg’s opinion from almost exactly year ago (8.26.05), his tone is radically different from the boosterism of Nevin, Gin, or Appleton-Young. Here is one example:
http://www.pbs.org/now/politics/thornberg.html
Now, the question is why independent economists from the many San Diego universities (UCSD, SDSU) do not provide more sane voices, and leave it to Alan Gin (UofSan Diego)?

[barnaby33]

Are you suggesting Alan Gin is a sane voice? I do not agree with the harshness of the tone of some of the comments in the previous thread, but Mr Gin is hardly a sane voice. Being 80% of the booster of some of these quacks still puts you firmly in booster territory.

more_lies_from_alan_gin

Josh

[powayseller]

UTC Renter, what about Thornberg’s comments make sense to you? He predicting flat prices until wages catch up. He even had a false chart in his report, with no sources, and it falsely showed San Diego housing prices staying flat in the 1990’s downturn. He says some good things, but on real estate, he is way off base. he never mentions exotic lending, and he says a bubble bursting does NOT mean prices drop,because they will NOT drop. A bubble bursting means prices stop rising until fundamentals catch up.

I wrote a 3 part analysis debunking Thornberg’s forecast. There is way too much wrong with it to rewrite it all here. Check the archives or ocrenter’s site for it.

[UTC renter]

Sorry, I meant to say that sane (unbiased) economists from other SD universities should not allow that Alan Gin is the sole reprentative of their profession.   In fact, I wonder how he can maintain his independence. Just see: 

http://home.sandiego.edu/~agin/

and

http://www.sandiego.edu/business/index.php?areaid=12 

 

In short, we're on the same page Josh.

[UTC renter]

Good points. Again, I only wanted to give an example of a perspective from a year ago that is relatively more balanced than the pollyannic UT and North County Times articles posted earlier. But, you are right, Thornberg and UCLA forcast have not fulfilled their responsibilities to the public of providing honest and unbiased view.

[barnaby33]

I have a hard time believing anyone is unbiased. The question is one of visible bias. As long as you know what someone’s bias is you can account for what they say. All forecasting is based on bias, because its an act of interpretation.

Josh

[bob007]

savings (downpayment amount), income and interest rates (income/interest rates is a nice proxy for monthly payments) alone determine housing prices in the long run.

i am not sure why everyone cannot understand this

[UTC renter]

well, this is going into philosophy, but the standard way of thinking about bias is by examining logical coherence. For example, let’s say I am given the following premises:

P1: “all people are mortal”
P2 “josh is a person”
then the logically coherent (unbiased) inference is:
C: “josh is mortal”

So, if a housing expert is given the following premises:

P1 “All periods of rapid increase have been followed by a periods of decline”
P2 “We had a very long period of rapid increases”
and the expert says:
“there will be no decline”

I think I am entitled to call the expert biased, or incoherent. Just like I am entitled to dismiss flat-earth believers. Not because they can be very easily proven wrong (as you say, all data are subject to interpretation), but because their argument are typically logically incoherent.

[Daniel]

Powayseller: Thornberg’s forecast will likely be much closer to the actual outcome that yours will be…This much I’m pretty confident about.

[Author]

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