BizWeek on the new Housing Bubble

[bearishgurl]

[quote=sdduuuude]Perhaps the hubub of buying is related to interest rates rising, as they have been doing for a couple of months now.

People trying to make their purchase before the rates price them out.[/quote]

I’ve said this before … if interest rates rise, all the tiers of properties will still sell. The highest tiers will sell for mostly all cash, as will part of the lowest tiers, to investors. The other part of the lowest tiers and the tiers in between will sell for all-cash or with purchase-money mortgages.

As to your “hubub-buying” participants, they will still buy … yes, even if fixed MIR’s are 7.5% +. They will simply buy a lower tier of home.

That’s the way it’s always been (sounding like a broken record notwithstanding) :=]

[no_such_reality]

[quote=bearishgurl][quote=The-Shoveler] I was going to say,
And the next 4-6 million people SD expected is to grow will fit where?[/quote]

They can stay back in their double-wide in the state of MO, where they likely have family to help them in the event they are in need of “social services.” CA doesn’t need any more people, ESP of the “low to moderate income” variety.
[/quote]

I define affordable housing as pretty much anything sub-million. Not affordable as in low income. As for not having a high volume of sales, that is a peculiar SoCal thing, we have very high population and very low housing sales. When saying we need 7000 a month, something SD has never come close to, I’m talking to have the kind of fluidity in availability of housing that will keep from what you’re seeing happen.

I’m talking what kind of volume of listings and sales a county like SD needs, with 3 million inhabits and a million+ household units to not have what amounts to chronic scarcity. At the moment SD county has about 5400 listings. Less than 0.5% of the housing stock is for sale.

Again, as for Marin or SF county, most people residing in Marin, don’t make their living in Marin. As for SF, they’re having some real problems with traffic jams OUT of the city in the morning as the youthful workers working in silicon valley and living in the city.

As for not building, that would be interesting. But, I really doubt the population will stop coming. In fact, I think not building and not providing adequate housing will actually have the opposite effect that you desire, actually increasing the amount of low and poverty level inhabits. They’re use to living in substandard conditions where-as mid-high level incomes know they can have more.

[SK in CV]

[quote=bearishgurl]
CA coastal counties were never “set up” in the first place to attract the country’s masses of low and moderate income residents. That’s what CA’s inland counties (and NV/AZ?) are for.

[/quote]

I’m pretty sure that no modern city was ever set up to handle more than 2 million people except for Brasília. Cities evolve and adapt. Some better than others.

I understand your hate of CFD’s and that process. I can’t argue with you, you know a lot more about it than I do. (Though I think you believe that it is a primary cause of California housing problems, and that can’t possibly be true. If it was, Vegas, Phoenix, and much of Florida wouldn’t have had any problems.) There have been countless mistakes by city planners with respect to CFD’s, but I think blaming the process is misguided. In theory, they still make a lot of sense. It’s the practice that need improvement.

I’m a bit surprised by your elitist attitude. The growth of San Diego during the 2nd half of the last century was driven by median income homeowners. They filled Clairemont and created the commercial district in Kearny Mesa, and then Allied Gardens and later San Carlos, as well as the bedroom cities of Chula Vista, National City, La Mesa and Lemon Grove . That wasn’t an accident. It was by design, to attract moderate income homeowners.

You can argue that many of the newer developments in the last 30 years in Chula Vista, in the north county coastal cities, in north county inland in RB & Poway and PQ targeted some higher end buyers, but none of those areas were exclusively higher end (with the exception of CV). RB if you recall, was originally planned as a retirement community. That pretty quickly fizzled, but if I remember correctly it included the first PUD in the state.

You can whine about growth all you want. I grew up in San Diego. I remember when there was almost nothing but cows in Mission Valley. And where Fashion Vally Mall now stands, there was a brand new 8,000 seat baseball park. A lot has changed since then. But San Diego and other CA coastal cities aren’t attractive to people as a destination by accident. People WANT to live in SD. You can’t keep them out unless your goal is to drive major employers out. And that bus left a long time ago.

[all]

[quote=bearishgurl]
I realize that a good portion of these listings (20-25% ?) are “contingent” SS’s but I am failing to understand why so many prospective buyers are claiming there is “nothing to buy” due to “low inventory.”

Could it be that they THINK they need dozens of properties to consider before making an offer on ONE home?

If so, that’s complete and utter BS, partly fueled by agent/broker incompetency.

[/quote]

92127 has 9 non-contingent SFR’s under $800K. 92128 has about a dozen once all age-restricted areas are removed. Three years ago we had more than 100 houses matching the same criteria.

[spdrun]

Just because they’re going into contingency quickly doesn’t prohibit someone with a quick broker from getting in an offer. There are also other ways of buying, like REO (not trustee) auctions.

[no_such_reality]

Because if 1% of households wants to buy house or investment property, that’s 11,000 needed sales.

We have 5000 on the market.

see a problem?

[spdrun]

Some buyers will drop out and wait it out, or buy investment property in another state. Other houses will be short sales, where the seller will take the first offer likely to stick. 5000 houses. 11,000 buyers. That still leaves a 45% chance of a buyer matching with a seller. Get to it.

[bearishgurl]

[quote=no_such_reality]I define affordable housing as pretty much anything sub-million. Not affordable as in low income. As for not having a high volume of sales, that is a peculiar SoCal thing, we have very high population and very low housing sales. When saying we need 7000 a month, something SD has never come close to, I’m talking to have the kind of fluidity in availability of housing that will keep from what you’re seeing happen.[/quote]

For a CA coastal county, I would define “affordable” listing inventory as priced under $400K. ALL CA counties have a “low volume of sales” irrespective of their populations. There is less mobility and deed-transfers (NOT one and the same thing) in CA than other states due to Props 13, 58 and 193.

Buyers looking for a principal residence in a particular price range who are purchasing with a mortgage don’t need “fluidity,” whatever the h@ll that is supposed to mean. They need to purchase an acceptable roof over their heads under the direction of a very competent agent/broker. ESPECIALLY in the current RE climate.

[quote=no_such_reality]I’m talking what kind of volume of listings and sales a county like SD needs, with 3 million inhabits and a million+ household units to not have what amounts to chronic scarcity. At the moment SD county has about 5400 listings. Less than 0.5% of the housing stock is for sale.[/quote]

SD has 7200+ current listings which are posted on the MLS (see my sdl link in a prev post). There are no doubt hundreds more which are NOT currently posted on the MLS.

[quote=no_such_reality]Again, as for Marin or SF county, most people residing in Marin, don’t make their living in Marin. As for SF, they’re having some real problems with traffic jams OUT of the city in the morning as the youthful workers working in silicon valley and living in the city.[/quote]

It doesn’t matter. The residents of these counties, if “worker bees” in a county which is not one of the three, will do a “reverse commute” to an adjacent county to work. All three of these counties have large populations of retirees (yes, even SF). Those “youthful” commuters from SF to Silicon Valley can take the Caltrain instead of the (congested) US-101/I-280 to dozens of major SV firms (almost door-to-door in many cases).

[quote=no_such_reality]As for not building, that would be interesting. But, I really doubt the population will stop coming. In fact, I think not building and not providing adequate housing will actually have the opposite effect that you desire, actually increasing the amount of low and poverty level inhabits. They’re use to living in substandard conditions where-as mid-high level incomes know they can have more.[/quote]

This (incoming) “population” can and will continue to come. They’re welcome to buy one of the 7200+ properties currently listed on the local MLS or rent. If it gets down to 3600, 2400 or 1500 or less in the future (like what happened in those MLS’s in the Silicon Valley) they can buy one of those or rent.

I don’t agree that having a moratorium on building will create poverty in SD. It will actually eventually have the effect of enhancing current property values. We don’t have very many houses with “substandard” living conditions here, due to stricter building codes and “rental-habitability laws” than other states. It’s not that kind of a city. In addition, SD has never had any “public housing projects.” There really is little, if any, actual “blight” in SD, compared to other US cities. These “low-income and poverty-level inhabitants” you speak of are already here. Most of them have section 8 and other housing program vouchers and have resided in their current rentals for over ten years. They’re doing fine and aren’t going anywhere. They’re also beginning to occupy CA’s (now “busted”) exurbs to a MUCH GREATER DEGREE than its coastal cities.

http://www.thefiscaltimes.com/Articles/2012/07/05/Housing-Crisis-Could-End-Suburbia-As-We-Know-It.aspx#page1

Whether or not any new construction tracts continue to be released, “mid-high-level-income” incoming buyers (whatever that is supposed to mean) will continue to buy whatever they can afford in SD Co. If mortgage interest rates go up substantially, they will buy much less (if they want to live closer to work in SD County). If they think they “have to have more,” they will buy in another county (such as in Temecula and surrounds) and commute to their jobs in SD County.

That seems to be what it’s there for :=0

[bearishgurl]

[quote=spdrun]Some buyers will drop out and wait it out, or buy investment property in another state. Other houses will be short sales, where the seller will take the first offer likely to stick. 5000 houses. 11,000 buyers. That still leaves a 45% chance of a buyer matching with a seller. Get to it.[/quote]

It’s actually 7200+ current listings on the MLS, but good advice, spdrun!

[bearishgurl]

[quote=no_such_reality]Because if 1% of households wants to buy house or investment property, that’s 11,000 needed sales.

We have 5000 on the market.

see a problem?[/quote]

No, I don’t see any problem, nsr. With 7200+ local MLS listings on the market (a portion of them now listed for over 90 days), these “local households” who want to buy a residence or investment property need to get out on the street and get busy.

Time to make a deal.

[bearishgurl]

[quote=craptcha][quote=bearishgurl]
I realize that a good portion of these listings (20-25% ?) are “contingent” SS’s but I am failing to understand why so many prospective buyers are claiming there is “nothing to buy” due to “low inventory.”

Could it be that they THINK they need dozens of properties to consider before making an offer on ONE home?

If so, that’s complete and utter BS, partly fueled by agent/broker incompetency.

[/quote]

92127 has 9 non-contingent SFR’s under $800K. 92128 has about a dozen once all age-restricted areas are removed. Three years ago we had more than 100 houses matching the same criteria.[/quote]

And the problem is . . .?

[bearishgurl]

craptcha, if you’re a prospective buyer in 92127/92128, may I ask what’s wrong with the 21 listings that you presumably CAN make an offer on?

[spdrun]

Also, say you have 100,000 buyers per year and 100,000 sellers per year. In my imaginary world, all listings will go into contingent and never go back into active within exactly one week. Assuming an even rate of sales, you’d end up with under 2000 actives on MLS at any given time.

[flyer]

As a native, and as SK mentioned, I remember San Diego when it was far less densely populated. Even though we don’t love some of the changes population growth has created in the County, we know it’s part of “progress,” and simply accept it.

Most of us who have been here for awhile, already have the homes and the lives we want, so it’s a fairly moot point, but for those who have younger children who would like to work here and buy homes here in the future, or for those who would like to relocate to our fair city in the future, IMO, the housing situation will continue to be a real supply and demand challenge–like it or not.

Perhaps different policies might have given us a different outcome with regard to the housing issue, but since we can’t go back in time, we’ll probably never know.

[no_such_reality]

[quote=bearishgurl]craptcha, if you’re a prospective buyer in 92127/92128, may I ask what’s wrong with the 21 listings that you presumably CAN make an offer on?[/quote]

The fact that there are probably 1000 buyers looking.

This isn’t a market that is in balance. This is a market that is horribly constrained.

That constraint, raises prices, pushes people out of the market and causes people to hold their properties thus decreasing turnover because they can’t replace their property.

That low turnover, and low availability of housing units INCREASES demand for NEW HOUSING buildout. It is what drives demand for those CFDs.

I could care less if they build new units as downtown condos, increase denseness in existing housing tracts, but SD has an inadequate supply or both rentals and owner occupied housing. More importantly, the housing mix have is actually quite poor in quality and location. We need more housing close to the job centers and that housing needs appropriate social infrastructure.

Your argument is akin to Soviet Era grocery shopping behind the iron curtain. There’s three steaks in the counter and 100 people in the line. So you better be happy getting a turnip.

[Author]

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